As India's richest families race to outfit their kitchens with the latest European trappings, thousands of village entrepreneurs are discovering how to squeeze profits from a squat $17 (Dh61) stove locally designed to reduce global warming and preserve women's health.
Named 'Oorja', meaning energy in Hindi, the stove is part of India's answer to rising concern over the nation's total emissions – the fourth largest in the world. Unlike many government or NGO-funded projects, this one relies on India's keen entrepreneurs.
Such businesswomen include Lakshmi Babu Pitagi, who began her career by selling tea door to door in the quiet lanes of Karnataka's Sulebhaavi village. Now she is part of a rapidly growing network of women recruited to sell an innovative biomass stove run on fuel pellets made from ground nut and other commonly available agricultural residues.
Pitagi seeks to liberate her neighbours from relentless eye-watering fumes of traditional wood-burning stoves, which pose serious health hazards and expand India's carbon footprint. And she expresses confidence that she can make money in the process. Within seven months of launching the product, she convinced a quarter of Sulebhaavi's households to purchase the stove.
"This is a lifelong business," says Pitagi, 33, who makes a slender commission on the hexagonal INR675 (Dh61) metal stoves and the INR20 sacks of pellets to keep them burning. As she and other vendors learn the trade, they are also educating their boss, global energy giant BP, about the challenges of rural marketing in a culturally diverse nation that's just beginning to tap into the "base of the pyramid" of consumer power.
Hundreds of millions of Indian villagers still rely on wood-burning stoves, as gas remains a remote luxury in many states. Rural families report that it costs about INR330 per month, or $8.50, to cook entirely with gas, and many can't save the lump sum required for a gas cylinder. In contrast, BP's vendors pitch the affordability of a weekly supply of two sacks of pellets, which is INR50 cheaper than wood purchased in a local market.
On the environmental front, a 2006 report prepared by an independent agency concludes that the stove reduces carbon monoxide by 71 per cent and lessens suspended particulate matter by 34 per cent. Cooking takes less time because the pellets burn more efficiently than wood, explains HS Mukunda, a professor at the Combustion, Gasification and Propulsion Laboratory at the Indian Institute of Science in Bangalore.
In contrast to previous government and philanthropic efforts to simply give away newfangled stoves – programmes that have proved largely unsustainable throughout Asia – BP is relying on commercial gusto to spur product acceptance. The company will also test the stove in Vietnam and China this year.
By giving dealers an incentive to keep supplying the pellets long after they make their first commission on the stove, BP has swerved away from the longtime practice of dumping a stove on consumers and letting them fend for themselves to find fuel.
For the energy giant, however, this is yet to become a profitable venture. The company is striving for greater economies of scale and more technical modifications to erase the INR225 gap between the stove's current manufacturing cost and retail price.
Still, with a sales goal of 1 million stoves by the end of 2009 and a break-even target of 2010, company managers are cheered by the market response, with more than 7,000 new consumers each week purchasing an Oorja stove. The company has recruited and trained entrepreneurs in 2,750 villages across Karnataka, Tamil Nadu and Maharashtra states, where they racked up sales of nearly 200,000 stoves.
Many analysts agree that the commercial approach has better odds for success. "Anything that comes to the beneficiaries free is not taken seriously," says Pradeep Kashyap, vice-president of the Rural Marketing Agencies Association of India.
But in a country with poor roads, ensuring a reliable network for repairs and pellet supply represents a major challenge for BP. Eschewing national advertising, the company has zeroed in on local tactics, including village fairs, roadside demonstrations and mobile vans. Training sessions tap experienced village entrepreneurs to coach novices.
It's a costly exercise. But BP is betting that the learning process will pay off later when it tries to bring other products into rural markets, including low-cost lighting and heating devices.
To be sure, Oorja remains out of reach for the poorest of the poor. Women who walk for hours to collect free firewood in India generally cannot afford a one-time payment of INR675. Entrepreneurs like Pitagi generally refuse to supply the stoves on installments, except when it comes to their own relatives. For all the buzz generated by microfinance initiatives in India, no viable plan has emerged. "We accept the fact that we don't have the means to reach the people at the extreme lower end of the spectrum," says Sunitha Krishnamurthi, general manager for marketing at BP Energy India Pvt. Ltd, the Bangalore-based unit that is spearheading the Oorja project. "Our audience makes more than $2 a day."
One exception is Lakshmibai Hireappa Sampagani, a 60-year old widow in Karnataka's Itagi village. She makes just INR30 a day in the fields, but still managed to buy an Oorja stove last October. "It's not like it was a luxury. It was a necessity for me," she says. Heavy smoke was bothering her eyes, and she couldn't stand the long walk to collect wood, especially during the rainy season.
Wedged between the mud-packed walls of her narrow kitchen, Sampagani voices a common complaint. "When you don't have enough food to eat, where will you get the money for gas?" she asks, a basic question for housewives all over the developing world.
Efforts to devise and refine local solutions such as Oorja are essential to easing the painful daily struggle for affordable energy and emission control.
- Margot Cohen is a journalist based in Bangalore.
The New York Times Syndicate's Global Business Perspectives