India's Candle Enterprises Enable Families To Leave The Slums Behind

In this series, Sramana Mitra shares chapters from her book Vision India 2020, that outlines 45 interesting ideas for start-up companies with the potential to become billion-dollar enterprises. These articles are written as business fiction, as if we’re in 2020, reflecting back on building these businesses over the previous decade. We hope to spark ideas for building successful start-ups of your own.

Having honed our methodology with the 12 to 18 age group, moving them out of city slums, providing them education and viable professional skills, I started to expand on the idea. For with the success we were witnessing among the 12 to 18 year olds, it was impossible to watch the rest of their families continue to struggle amidst the slum squalor. I wondered if we could go further, moving entire families. Deepti was the first project to test this direction.

As we expanded the scope of our market research, we heard again and again, “We would love to move out of the city, but we have nowhere to go.” For most, the city, no matter its brutal pace, its pollution, and violence, held better opportunities than the village. One particular 36-year-old mother of three who had moved to Kolkata from a rural town added immense color to our research. She worked as a maid servicing five different households. “You work all day long in the field, but can’t even afford two meals,” she said. “Here, my income is good. Although, where we live is terrible. I miss our village home.” In the city, her husband worked as a rickshaw puller, earning 200 rupees, or $4 a day. Enough to feed the family’s five mouths, but nothing more.

I chose candles for the Deepti project because they’re easy to make, non-perishable, and boasted an enormous global market of $15 billion in 2008. I estimated this to grow to almost $80 billion by 2020. And with innovative designs, we could produce something unique and differentiated, experimenting with exotic forms and shapes, as well as fragrance.

To start this project, we first had to create a place for the slum dwellers to go. Leaving the city behind, we looked at land adjacent to land we’d already acquired for Camellia and Palanquin. Here we acquired large chunks of land – ten acres apiece – and in these untouched fields, we broke ground on low-cost housing for about 5,000-6,000 people per. These Deepti centers overlooked fields of irises owned by Camellia and sprawled near the workshops of Palanquin. When the Vidyangan school hours ended, the children spread out in the fields and hurried into their respective shops, making candles and armchairs and futures.

In the beginning, we used the same model as Camellia: inner-city sales reps empowered with Deepti franchises selling door-to-door, offering strings of dark indigo non-drip candles to the upwardly mobile. These reps told the story of their craftsmen and their valiant effort toward a better future. Customers stood in doorways listening. Their children popped their heads out occasionally, fingering the candles where they hung. With a large portion of the Indian middle class’s household incomes now between $30,000 and $60,000 a year, and the cost of living still relatively low, the affluent could spare $25 a year to support the candle-makers.

And they did. Gradually, candles began illuminating affluent dinner parties and events. Whole tables of biryani and parathas jittered in the wavering light. They also lit altars, a place where only flowers and oil lamps – pradeeps – had had a place before.

We started selling candles to hotels and spas, including Amrapali, Renaissance, and Darjeeling. These corporate deals ensured us important working capital as we juggled the various challenges of a rather complex enterprise relocating families, building communities, and rebuilding livelihoods.

By the end of 2011, we had 60 centers – each franchised by a regional entrepreneur – in which 80,000 people found an opportunity to restart their lives. This time, as they returned to village life, there was a livelihood awaiting them. We produced 12 million candles that year, and most importantly, we did so while preserving perfection in every contour. Our 2011 revenue was modest at $6 million.

In 2012, with a reasonable operation in place, we started exporting to reach a broader market with bigger margins. While in Palanquin, exports would have been cumbersome due to the more complex packaging and shipping requirements, candles were relatively simple to work with. In light of this, we created an e-commerce business to cater to North America and Europe, where we could undercut prices by a third. Beyond our price differentiation, our story which we told on our Web site – that Deepti was offering thousands of slum dwellers a better opportunity – generated tremendous consumer interest from the West.

Our international footing soon took hold. By 2015, we had 1.3 million online customers and $200 million in export revenue. The domestic business, meanwhile, had grown to $100 million. The following year, we began marketing to restaurants, hotels, and spas – to those with bulk needs – in Europe and North America. In fact, the hotels, restaurants, and spas further spread the Deepti brand deep into their customer base. And soon, with households following the commercial trend, business grew rapidly – our revenue scaled to $300 million in export, while domestic followed suit to the tune of $150 million.

Amazingly, we had taken a commodity product and turned it into a status symbol both by giving it aesthetic appeal, and by making affluent people all over the world feel responsible for our anti-slum movement. We were, lit by our candles, enjoying what economists call the “warm glow effect” – that many products are bought because they make people feel good about themselves.

The global media gave us a huge hand in spreading the movement. Photojournalists captured disturbing images of maimed slum children in Kolkata, Mumbai, Delhi, and Lucknow, and as they wrote about them, they also wrote extensively about the alternatives that projects such as Deepti, Camellia, and Palanquin were creating. Contrasting images of shanties against idyllic candle-making communities in rural India captured the imagination of the world.

But unlike many such endeavors, we were not a nonprofit. We were a thriving, triple bottom-line enterprise serving our shareholders, alongside our local communities and the greater environment. Our reward: In 2020, our projected revenue is close to a billion dollars; our 1,500 Deepti centers are home to some two million former slum dwellers; and our four million online customers spread across North America and Europe, from Santa Barbara to Calgary, Cardiff to Cannes, Rome to Munich, lighting the globe from one window to the next.

Looking For Some Hands-On Advice?

I receive many emails from entrepreneurs who want to discuss their specific businesses. I’m very happy to discuss your situation during my free online 1M/1M Roundtables, held almost every Thursday. During each roundtable, up to five entrepreneurs can pitch their businesses and receive my immediate and straightforward feedback.

To give entrepreneurs all over the world access to Silicon Valley’s knowledge, methodology, and network, I founded the One Million by One Million (1M/1M) global virtual incubator. 1M/1M aims to nurture a million entrepreneurs to reach a million dollars each in annual revenue and beyond, thereby creating a trillion dollars in global GDP and ten million jobs.

For those still testing the waters of entrepreneurship, I’ve written my Entrepreneur Journeys book series to inform and inspire. My newest book, Billion Dollar Unicorns, is now available from Amazon.

If you are interested in entrepreneurship topics and my writings, you can follow me here. I hope to publish articles on LinkedIn every week.

Photo credit: Swaminathan/Flickr.com.