Eventual sweet taste of success

Sorin Grama and Sam White's journey in India had a succession of failures and setbacks

In life, it’s easier to fail than to succeed. Romania-born Sorin Grama and US-born Sam White learnt this the hard way in India. The two are co-founders of Promethean Power Systems, a company they set up in India some years earlier, moved base to Delhi for a while to sell their idea and, after having tasted many failures, seem to finally be on the way to achieving a degree of success.

In 2007, the duo first came to India to try and sell a technology developed by some of their fellow MIT students. The idea was to use a solar thermal system that could produce heat and electricity for schools and clinics in rural areas, using easily available components such as car parts. The technology had been developed but someone had to find a market for it. 

Grama, an MIT graduate, was convinced that there would be a market for it here.  But in due course, the founders realised they were off the mark. “It was a good idea but it wasn’t what India needed,” says Grama, who has an MS in engineering and management from MIT. 

This is when they discovered the dairy opportunity and changed their direction from being a “technology looking for a problem to solve” to understanding the problem first and then developing the technology. They went back to Boston, worked on the new technology and came up with an energy storage system for milk refrigeration.

It still wasn’t smooth sailing. First, the duo tried a solar milk chilling system, in 2009. However, when they brought it to India, no one was excited. “It was both too big a contraption and too expensive,” says Jiten Ghelani, now chief executive of the company. Grama and White then tried an ice-based technology in 2010 but that didn't fly either.

Workable

One would think most people would give up at this stage but Grama and White stayed at it.  Finally, in 2011, they devised a thermal energy storage solution that would allow you to store the 'energy' and chill milk as and when required. Sorin was principal inventor of Promethean's thermal battery, an energy storage device that provides effective back-up in areas with unpredictable grid power.  White is not an MIT graduate but joined the team of MIT students early on to help with business development.  

The difference between Promethean and competitive systems is that the former doesn’t require a drop of diesel. “Many competitors offer generator sets based on diesel as the fuel, which is both less green and less economical than ours,” says Ghelani. Their system is 10 per cent higher in price than competitors but the dairy saves 20 per cent in operating costs. Over five years, the full cost of the system is recovered.

Among the larger competitors within India are IDMC and ISF Industries, and within the multinationals, there are Serap and DeLaval (all four are into milk chillers). All are several times bigger but their systems run on traditional diesel generators or normal grid power only.  So, finally in 2011, they had something people - and dairies in particular - were willing to look at. At that point, Grama and White moved to India bag and baggage, to sell their idea.

In the initial days, there was a lot of excitement around the new offering. Dairy farmers and processors in rural India began trying out the battery to chill milk at village collection centres. Over the years, impact investors put in around $4 million in the company. Some of the main ones are First Light Ventures, Invested Development and Solgenix. Grant agencies such as USAID, National Science Foundation and MIT have also supported the project.

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But…

After the initial excitement died down, there was a bit of a low. New customers were hard to convince. “Maintaining that momentum and building on it has been our biggest challenge. People don’t necessarily want to change the way they do things, despite visible benefits,” says Ghelani, who joined as operations head in 2014 and was made the chief executive the following year. The company realised that solutions for diaries might need to be customised and they needed a different approach. As luck would have it, Grama (who’d recently become a father) and Sam White needed to get back to the US but needed someone whom they could trust, understand and relate with to steer their ship, that still needed a fair amount of navigation. That's when Ghelani came into the picture. Born and raised in America, he was looking for an opportunity to move back to India with his wife.

Arriving

Led by Ghelani, the company refined its product, approach and price, demonstrating to customers that their product had real value. Finally, in 2015, it managed to convince some of the larger diaries that its product had merit. Today, Hatsun, Amul, Mother Dairy and Nestle are among its clients. One of the biggest dairies, Hatsun, has bought a little over 300 systems and is likely to buy several more for its collection centres. 

Ghelani says most of their clients can absorb thousands of systems to install at the village level. National Dairy Development Board is working to convince dairies that it makes sense to collect and chill milk at the village collection centres rather than at centralised collection centres, as wastage is reduced.

Ghelani thinks the earlier problems are behind them. When he joined, the company wasn't selling much and the initial enthusiasm customers showed was dwindling. His team and he slogged through the rest of 2014 and most of 2015 and now there is some stability in the operations. The company sold a little over 300 systems in 2016 (in 2015, it sold 100) and recorded a turnover of ~20 crore. It expects an annual rate of growth of 15-20 per cent for the next five years. 

Also, they see a market in many developing countries in the region. Although it has a long way to go within India itself, it recently expanded to Bangladesh and Sri Lanka, with the belief that the wider it spreads its tentacles, the higher its chances of tasting success.

Expert Take

Srikumar Misra is founder, managing director and chief executive of Milk Mantra

According to the Food and Agriculture Organization, 30-40 per cent of the world’s food production does not even reach to market, with roughly 1,300 million tonnes of food worth over $1 trillion, either wasted or lost. There is a significant opportunity for technology intervention in the dairy supply chain in India, where it is widely disaggregated and there is an implication on not just both spoilage but also product integrity and quality. 

Promethean is rightly targeting this wide opportunity and is also developing a product that works well within the challenges of rural India, i.e lack of reliable grid power. Almost all dairy companies rely on 100 per cent back-up via diesel power generators for their sourcing infra networks, which adds both cost and inefficiency. Proximity and instant chilling of milk will also improve its storage quality till it reaches the next stage of processing. Sustainability issues are becoming critical as well. 

However, there are challenges. Unless the product developed by Promethean replaces some infra in the supply chain but only adds on another additional piece of infra, then it poses extra capital expenditure (capex) issues for companies. Further, unless this additional layer significantly shifts the needle on milk quality the capex would appear a challenge. Incremental gains in quality might not provide sufficient adoption impetus to medium, large dairy players. Promethean could take a serious look at how its product can completely eliminate some existing infra in the way the dairy supply chain is structured currently.