Sunday, December 25, 2005

A consulting NGO

The aim of this series of posts is to explore the feasibility of forming an NGO which provides consulting services to small businesses and cash-strapped governments. Readers' thoughts, ideas and viewpoints are welcome as they would be very helpful in refining the idea and making a full-proof case.

This thought came to me two days ago, on a lazy saturday afternoon, with nothing better to do than sleep (it was snowing outside and watching some Korean channel on tele was the last thing I wanted to do). Random thoughts appeared in my mind around the central idea of a consulting NGO. Without rambling further, let me get down with the idea.

India abounds in small, unorganised businesses which have their presence in almost every sector affecting our daily lives. Lack of resources is a major reason for these businesses to not have access to any kind of consulting services; hence these businesses have not been able to achieve significant progress (Sorry for being vague here) inspite of being around for a very long time.

One way to help these businesses perform better is to provide them with consulting services at nominal costs. Given the premium which consultants command, one way to achieve this is by forming an NGO to help small businesses (a prototype called SOMA already functions at IIM-Ahmedabad, it needs to be done on a bigger scale). This will help intellectuals (consultants in particular) contribute to the well being of the society in the most efficient manner - doing something they have the core competence for.

As a start, I have tried to list the key points for creation of such an NGO, lets say at Mumbai

The NGO can have a core group of partners who will identify and actively seek out small businesses needing help and pitch to help them professionally. The engagement would then go to an engagement manager who will manage the project from there on with two / three volunteer-consultants as the need may be.

Every member is expected to spend atleast one weekend every month with the NGO to ensure a minimum bench strength to be staffed on assignments.

One assignment definitely cannot be completed in one weekend, unless it is done as a business case-study, which is definitely not the aim of this NGO. I guess volunteers may have to work 4 or 5 weekends at a stretch to complete a project and then have an extended break of around three months. But this kind of an arrangement may discourage volunteers as most of us will definitely be averse to working these many weekends at a stretch ------ Ideas required to get this critical aspect right.

Human Resources:
Any graduate can apply to work with the NGO as a consultant. Engagement Managers and Partners will require relevant consulting experience (more on this in later, when I get more inputs)

Junior volunteers can be recruited from college - they may work full time in their vacations or on weekends during regular college hours.

Government Organisations like BEST, Maharashtra State Transport (also called "ST" or "A-SH-T" by the locals, this is a really big, but cash strapped organisation and is in a real mess), BMC schools, Aarey Milk Colony, Mumbai taxi drivers' association (refer earlier post), Apna Bazaar, etc - Small operational level projects for these organisations

Small businesses like manufacturing (a lot of them dot the industrial landscape around Mumbai), restaurants, small retail chains, budding entrepreneurs, other NGOs, etc

Although there are no salaries to be paid out to the volunteers, operational expenses need to be taken care of. Until such time the NGO becomes self-sustaining (i.e. all expenses are covered by the client fees), corporate sponsors need to be roped in. --------Another aspect where brainstorming required.

Sunday, December 18, 2005

Mumbai's Taxis

Since the 20th century Premier Padmini (Fiat) taxis are taken away from the Mumbai roads with a view to modernize the taxis, a lot of options have been discussed. Secretaries of the taxi associations in Mumbai went on a Singapore trip to look at the structure there and commented that the same structure cannot be followed in Mumbai because the Singapore system was akin to slavery.

Wierd, because many of the taxis in Mumbai also run on the same principle. The taxi driver pays the taxi owner (car company in S'pore) about Rs. 150 per day ($90 in S'pore). All other conditions are pretty much the same (petrol/gas paid for by the driver, maintainence and insurance paid by the owner/car company).

The only people benefitting from the current arrangement are the taxi owners (different from the taxi drivers), as they make ~Rs.3K per month (post maintainence and other expenses, I doubt if any Mumbai taxi is insured) for doing nothing other than owning the vehicle (approx cost. Rs.50K).

My bet for a possible solution is to keep the taxi-license and the taxi-driver's license separate. The taxi license can be issued to any person owning a vehicle which satisfies the required norms (I hope the new norms are stricter w.r.t the quality of cars, safety aspects, etc). The taxi-driver's license can be issued to any person (again, the union will demand that their members be given the licenses first, I have no problems with that if they satisfy the basic conditions for being a taxi driver)

A look around the world will tell us how bad the Mumbai taxis are. London uses anachronistic taxis, but they are surprisingly comfortable, fuel efficient and well-maintained, Paris/Munich/Berlin/Brussels use Mercedes Benz and Volkswagen taxis, New York Ciry uses its long Fords (though I personally do not like the Ford taxis) and Camrys and recently, cars looking like the Toyota Innova, Seoul uses Hyundai Sonata and other cars. Yes, these are developed cities, but why go any further, taxis in Colombo are air-conditioned Mitsubishi Lancers and the rates are not too different from Mumbai cabbies. So what is a good option for Mumbai? Two vehicles come to my mind. The Indica diesel / CNG and the Maruti Omni LPG (Maruti van for some). Reasons : Low Price, lots of space for 4 passengers + luggage, low operating and maintainence expenses, safety (in an Indica, need to ascertain the safety aspects for the Omni).

Considering the cab economics in Mumbai, a taxi has to be profitable for the driver as well as the owning company. Assume that the owning company will still make ~Rs.3K after the new rules come in (i.e., they will rent the taxi out for Rs. 150 per day) and the driver will continue to make as much as he made before (As consumers, we don't want to have increased cab rates, do we???). For an investment of 3 lakhs (for an Indicab), it gives an ROI of 12% while for the Omni, the ROI is an attractive 18%. If the new Tata car (priced at less than 1.5 lakhs) is introduced sooner, the equation may change in favour of the taxi drivers with the daily rentals decreasing to as low as Rs.100 and in favour of the commuters with a decrease / no increase in rates. For the taxi drivers, the ecomomics is simple. 8 hrs of taxi driving @ Rs. 50 per hr yields Rs. 400. Fuel = Rs.100 (Yes, the LPG/CNG option is that cheap, even diesel is not too different, but is more polluting), rent = Rs. 150, Leaves him Rs.150 daily. A 10 to 11 hr day will fetch the driver Rs.250

An investigation needs to be done into the feasibility of each driver owning his vehicle and floating a company for the same, I am sure this option would eliminate the complaint of the perceived slavery which the taxi drivers' association has. Finance options can be made available to the drivers for purchasing the new vehicles (sans taxes, because it is a public vehicle).

What happens to the old vehicles? Well, Premier Padminis sell @ around 30K (n'th hand, n>2). These would probably be picked up for use as taxis in some smaller towns, as they are cheaper than the Bajaj autorickshaws !!!

All in all, Mumbai can get better cabs with no negative effects for the commuters and taxi drivers.