BANGALORE/MUMBAI: An odd lot of students at the premier Indian Institutes of Management has decided to make way for their classmates jostling for jobs in a tight economy. Some of them from the 2013 batch have opted out of placements to sell sanitary napkins to rural India, start a network for photographers, and make algorithms that predict the market. The entrepreneurial road is less travelled, but the drive is strong.
Niranjan KM (23), an IIM Indore graduate, plans a start-up to manufacture and sell sanitary napkins in rural India. He had earlier thought of being a candy maker or mineral water producer but realised the market potential for sanitary napkins was big. Niranjan will start the plant in global manufacturing hub Tirupur. The expenses will be around Rs 1 crore, of which the Tamil Nadu government has approved Rs 25 lakh. He plans to raise the rest through a loan.
“The big companies see money in the urban areas, while I plan to concentrate on rural areas. I can sell each napkin for around Rs 3-4 which is about half the cost for such a product from an FMCG major,” he says. Niranjan’s research showed rural women know little about sanitary napkins and his marketing campaign includes raising awareness through skits during festivals.
It may not be the best time to walk out on campus placements, with the economy on the slouch, but students feel their ideas cannot wait for long as others may pick them up. They are wired differently and prefer to have their own start-ups rather than take the plunge into the corporate world, says Rajesh Aithal, placement head for IIM Lucknow. Final placements at the IIMs start in February-March and typically, three to five students are seen walking out of placements from each of the institutes.
In a weak economy, such a decision involves more than the regular dose of risk involved in starting up on their own. But the comforting factor is that the alma mater will watch the entrepreneurs’ back in case the ventures fail. In the past three to four years, all big IIMs have introduced deferred placements, wherein a student who has opted out of the placement process is allowed to sit for company interviews after a gap of two to three years. IIM Bangalore, for instance, provided this choice from 2011 onwards. This practice gives students like Ajusal Sugathan and Achin Agarwal the cushion they need.
The two IIM Bangalore students have started an alternative investment management firm called Hedge Quants that will that specialise in quantitative trading and investment strategies across Indian equities, fixed income, currency, volatility and derivatives. “We have developed seven to eight models and our simulation tests show we can predict market movements,” says 24-year-old Ajusal Sugathan.
The two students have entered into an alliance with Kolkata-based brokerage firm Shivmangal Securities on a profit-sharing model and will start work from April. “Unlike the West, Indian markets do not use the algorithm-based trading method, but our live simulations have shown good results,” adds Sugathan.
The IIMs, where an all-inclusive fee for a two-year course is Rs 12 lakh to Rs 16 lakh, say students with educational loans too digress from placements to start their own firms. In 2005, when fees at IIMs were at Rs 3 lakh to Rs 3.5 lakh, and students would typically take a Rs 2 lakh loan, at least three to four students would opt out of placements to incubate their own firms, says Shashank Rastogi, director operations for Centre for Innovation, Incubation and Entrepreneurship (CIIE) at IIM-A. Now, the loan amount has shot up to Rs 14 lakh to Rs 15 lakh, with the fee at around Rs 16 lakh. Yet, six to eight students at the institute want to build their own start-ups, he says. No student from IIM-A who opted out of placements returned for deferred placements since 2008, he says.
Then there are others who form an alliance with friends who have just quit regular jobs and want to start their own company. Venkat R from IIM-A started an online firm called Focaloid, where photographers get assignments, and clients pay the start-up. Venkat has received a seed fund of Rs 5 lakh from the CIIE and has raised another Rs 4 lakh along with two other friends who have just quit regular jobs.
There are also those who choose to go it alone. Gaurav Midha’s start-up partners took up job offers during placements at IIM Lucknow, but Midha decided to take it forward. Midha, along with two batch mates, started a data analytics firm, Beyond Numbers, within months of joining campus. But he is the only one who’s stuck to the course – his dream kept him going. “Data analytics is still a relatively new concept in India but it’s been growing at 20%-25%. I want a share of that pie,” he says.
In the final analysis, the entrepreneurial path has nothing to do with the state of the economy, says Rastogi. “The initial years for an entrepreneur are always tough, so there is never a good or bad economy,” he adds. But what he finds encouraging is that the budding entrepreneurs are building companies that are extremely diverse and reflect their passion. “We know of students who have taken up regular jobs but are interested in start-ups, and keep themselves abreast of this industry,” he says.
Source: The Economic Times