Business: Manufacture and maintenance of sewage cleaning equipment

Based: Hinjawadi, Pune

Year of inception: 1994

Big break: World Bank-aided five-year contract for Navi Mumbai 5-6 years ago

Employees: 70

Captial: About Rs 8.5 crore

Revenues: Rs 25 crore (2007-08)

Plans: Rs 100 crore revenues by 2012

"Our growth in the next three to four years will be powered by four lines of business: drain cleaning equipment, compacting garbage disposal trucks, industrial vacuuming machines and street sweepers," says Krishna, seated in his no-frills office at Hinjawadi, Pune. The company’s factory premises, which need urgent expansion, are an oddity in the otherwise snazzy neighbourhood dominated by IT/ITES companies, including Infosys. "We’re going to acquire more land in this area to expand our manufacturing capacity," says Krishna.

His expansion plans are based on a spurt in growth that is expected in each of the markets that his four business lines address. Garbage trucks currently constitute the largest chunk of his revenues—Rs 20 crore—and this market, currently estimated at Rs 25 crore, is expected to grow to Rs 200 crore in five years. "This segment is getting privatised very fast. About 70% of our buyers are private contractors," he says.

The company’s second largest business is drain-cleaning equipment, which is what it began with originally. KAM-Avida started out as a marketing outfit for a Chennai-based company called Southern Powertech, which used to manufacture the drain cleaning machines. It subsequently diversified into other businesses and reduced its focus on sewage cleaning equipment, leading Krishna and his partner to start manufacturing their own machines. "The company I worked for earlier shut down because it didn’t have manufacturing capabilities. We couldn’t make that mistake," he says.

But getting into manufacturing was not easy given that neither Krishna nor

Malhotra had relevant experience. Fortunately, a common acquaintance introduced them to Porus Dadachandji, an engineer who worked at Varun Shipping and was looking for an onshore job. Dadachandji became the third partner in KAM-Avida and now leads its engineering operations.

Once manufacturing capabilities were in place, KAM-Avida’s next challenge was to create a market for drain-cleaning machines in India. Krishna recalls that even five years ago, most people (municipal corporations) did not see the need to use machines, as the job could be done inexpensively using human labour. Krishna and his team were eventually able to sell the machines on the efficiency plank—over a period of time, using machines was actually more economical. In the initial years, business was also slower because of bureaucratic slowness in municipal corporations. Much of it is still controlled directly by the civic authorities, but processes have become relatively smoother now, and this will improve further with contracts now being given out to private companies.

Bright future

Today, the market for drain cleaning equipment, which essentially consists of tankers fitted with suction pipes that eliminate the need for human labour, is estimated to be worth Rs 12-15 crore.

This market is expected to grow to Rs 50-100 crore in five years, and much of this growth will come from the sewage rehabilitation projects being undertaken in tier-I and tier-II cities. Sewage rehabilitation simply means that drainage networks are cleaned and cased with silt-resistant material, which is the only solution, because building new sewage lines would mean breaking down overlying road networks. Unlike the garbage disposal business, which is led by the private sector, drain cleaning is government (municipality)-led.

The industrial vaccuming and street sweeping business are relatively new ones for KAM-Avida. The company has sold 10 street sweeping machines, for which it has a technology tie-up with US-based Johnston, in the last 12 months. It expects business to expand with the NHAI’s Golden Quadrilateral project nearing completion. "With 10,000 km of road to sweep, machines are inevitable," says Krishna.

This apart, city municipal corporations are also prime customers, and again this market, now at just Rs 5 crore, is expected to grow to at least Rs 100 crore in five years. Industrial vacuuming (machines that vacuum spillage such as cement and oil), which is already a Rs 100 crore market, is the company’s newest business and it has deployed a couple of machines so far.

The company got its first break from the World Bank-funded drain cleaning project for Navi Mumbai about six to seven years ago, which included a five-year maintenance contract. Today, 10-15% of its revenues come from operation and maintenance contracts, while the balance comes from selling equipment.

Yet, raising money has never been their biggest problem. "In India, cleaning is considered taboo. When we started out, a lot of our work was educating people, convincing them that machines were necessary. It required, and continues to require, a big change in mindsets. I think of myself as a cleaner who has dignity," says Krishna, though even after over 15 years in the business he is not sure if mindsets have changed enough to transform a Mumbai into a Singapore or a Shanghai.