In India, approximately 170 million people lack access to safe and clean drinking water. Nearly 75% of surface water is contaminated with arsenic and fluoride. Almost 60% of the illnesses in adults and 85% of the illnesses in children are caused by contaminated water and nearly half-million children every year succumb to preventable water-borne diseases such as diarrhoea and cholera. As a result, low-income families spend 40% of their annual wages for treating water-borne diseases every year. Lack of clean water is also detrimental for gender mainstreaming as women and girls waste 700 hours annually, on an average, to fill and carry water to their homes.
The business – Sarvajal
Sarvajal, meaning ‘Water for All’, was founded in 2008 by the Piramal Foundation with the objective of alleviating the problem of access to clean drinking water through imaginative and sustainable market-based solutions and thereby addressing the major social problems of health, poverty and gender equity and improving the quality of life of communities living at the bottom of the pyramid.
Sarvajal started with a pilot project in Bagar, Rajasthan with the aim to reduce fluoride contamination in drinking water in the Shekhawati region that had been linked to serious health problems. This pilot led to valuable technology and business process innovations. Thus, the Bagar Water Initiative was transformed into Piramal Water Pvt. Ltd. which is now famously known as Sarvajal.
Sarvajal leases its water purification technology/equipment to a local entrepreneur who becomes the franchise owner. The entrepreneur pays an upfront fee that represents a proportion of the cost of the filtration unit. Sarvajal helps these entrepreneurs mobilize finances from micro-lending institutions to enable them to cover their share of the capital cost. It also provides training, payment solutions, phone-based customer service, marketing materials and sustained service and maintenance for each franchisee. Revenue is generated by the franchisee by selling clean water to the underserved consumer at an ultra-affordable price of 30 paisa/litre, which is shared in the proportion of 60:40 between the franchisee and Sarvajal. Most franchisees hire an operator, a driver (for delivering water direct to households) and a helper for the driver – each new Sarvajal location therefore creates on average three local employment opportunities. It is built on a double bottom-line business model with scope for a rapidly expanding franchisee network.
Sarvajal adopted a three point approach of Accessibility, Affordability and Purity :
- Affordability – water is sold at a nominal price
- Accessibility – the targeted beneficiaries are an inclusive group cutting across all the strata of society.
- Purity – undergoes reverse osmosis and ultraviolet treatment, killing 99.9% of the germs and reducing the bacteria and fluoride content.
Sarvajal’s endeavour is also to bring safe drinking water to the underserved by leveraging the micro-franchising model which not only addresses a critical need at the base of the socio-economic pyramid but also assists in enterprise development by training ordinary members of communities, who better understand the needs of the place where they are located to act as micro-entrepreneurs to cost-efficiently manage water distribution. This empowering approach helps integrate the local entrepreneurs into the economic value chain by creating livelihood opportunities helping them become economically self-reliant.
Sarvajal has its roots in the work of the Piramal Foundation, a charitable trust established by Ajay G. Piramal. The beginning and the growth of the enterprise has been possible only through the support of the Corporate Foundation. Sarvajal today, partners with companies, non-profits, and agencies around the world to deploy end-to-end drinking water solutions for communities, facilities, and institutions. These partnerships have enabled Sarvajal to build unmatched expertise in delivering safe drinking water under the most difficult circumstances for any size of community from solutions for patients at public hospitals to water micro-grids in urban settlements.
In addition to the Piramal foundation, Sarvajal has worked with many companies as part of their CSR activities.
Benefits for the social enterprise
Developing technological innovation
Sarvajal has been able to develop innovative and sustainable technology with the support of Piramal Foundation, which has led to its rapid scale up. These technological innovations have assisted Sarvajal in enhancing the value proposition it delivers to its franchisees as well as the end users. For example the water ATM which allows customers to buy the quantity of water they desire, is a great advantage for low-income households who don’t need or can’t afford large quantities of water in one buy. The water ATM also allows segregated communities to be reached: the community which had previously not been allowed to drink Sarvajal water now has a new point of sale that is separate from the existing customers. As a result, Sarvajal has profitably served more than 200,000,000 litres of clean drinking to 75,000 regular customers in six states, through more than 150 franchisees, creating more than 400+ jobs.
Servicing corporate clients now helps Sarvajal to scale its service to states where they do not have a presence yet, subject to financial viability of project expansion. Companies have the resources and the ability to support installation in clusters on a large scale, and this yields economies of scale and operational efficiency for Sarvajal as it can service and maintain these units with relative ease.
Benefits for the corporate partner
Visible and holistic CSR intervention
By providing clean, drinking water corporate partners have been able to adequately fulfil their corporate social responsibility. They have been able to play a critical role in creating a social impact in the communities in which they operate, helping address issues of women empowerment, health and livelihoods through one single intervention.
Being a partner in provision of clean drinking water they have been able to make a significant contribution in tackling water-borne diseases and creation of livelihood opportunities with the promotion of local entrepreneurship and delivery boys. Women in villages have been spared the back breaking labour of carrying litres of water from miles away, giving them the opportunity to explore more productive activities in the time saved.
Supporting community based interventions such as this also helps companies generate goodwill, create visibility and build markets, especially for those engaged in mining and manufacturing.
When Sarvajal started out on its journey to engage with corporates it quickly realised that they would need an innovative and flexible model to partner with companies for their CSR activities. They used this insight to design three ways in which corporate could meaningfully engage with them:
- Project financing – The company could directly fund Sarvajal for setting up the water treatment plant in one or many local communities (capital costs and operating costs or any combination thereof) around its plant or factories as part of its community development initiatives.
- Micro enterprise funding – In the Sarvajal model, local entrepreneurs are given the responsibility of operating the water purification system and are required to invest their own funds, which can be an impediment for many small micro enterprises. So, the company can either offer a grant or collateral for bank loans to these micro entrepreneurs to enable them to take up the franchise or help to develop clusters of such small entrepreneurs in a region.
- Customer financing – The company can fully sponsor/subsidize the costs of water to the local community, thus giving the beneficiaries access to an essential service such as free drinking water. In order to facilitate this type of intervention, Sarvajal designed a unique mechanism – the water ATM, which works just like a prepaid top up card for mobile phones. People can scan on the ATM’s sensor and press the button (1 litre, 5 litres and 10 litres), depending on their water requirement.
Realistic corporate expectations
In some cases corporates attempt to adjust the working of the project to align it with their area of operations and manpower support. For instance, some of the corporate partners preferred to have a say in deciding the location of the water ATMs. Consequently, they ended up installing water filtration plants spread out in different corners of the country making it difficult to follow up with the implementation and maintenance process. Hence, it is expected that corporates set realistic and practical blueprint of plans so that the plans are feasible and viable.
Appreciation of Sarvajal’s model
As India sees a spurt in social enterprises developing innovative models to deal with social problems, it is imperative that the corporate sector also develops the sensitivity and appreciation for non traditional models of undertaking CSR.
Sarvajal relies on franchisee and micro entrepreneurial models to implementing its solutions. The success of these models and the filtration units installed in any village is entirely contingent on the entrepreneur’s returns, which are in turn tied to the water revenues. While a company can choose to fully subsidize the price of water for the final beneficiaries by paying for it, it needs to be mindful that once the CSR funding stops, the villagers will suddenly have to pay for water and may not be willing to do so. This will jeopardize the entrepreneur’s incentives and may lead to the collapse of the model in the village. An alternate approach is to partially subsidize the cost or subsidize it for say the poorest fifth of the population in the village.
Sarvajal defines itself not only as a social enterprise with an innovative business model but also as a movement – a movement to create a people-owned water business on ground. With a dual objectivity of social development and self-reliance, there are a few conditions that both social enterprises and corporates need to live up to. Social enterprises should be adaptive with the changing needs of the communities and changing demands of the corporate partners. Similarly corporates should be cognizant that some models are more complex than others and thus require a more nuanced intervention to not disrupt its long term viability.