Entrepreneurship

Short Takes: Bringing Safe Water to Rural India

A social enterprise success strategy: clean water in rural India, subsidized by urban consumers.

January 10, 2023

Meet Divya Yachamaneni, CEO of Naandi Community Water Services, a for-profit social enterprise bringing safe drinking water to rural communities across India. Hear how this mission-led company made a strategic pivot to get the “urban rich” to help subsidize and ultimately scale its impact.

Coming from an urban environment, Yachamaneni had no idea how widespread and severe the problem of contaminated water really is. Visiting rural communities made the issue crystal clear. In one village, she recalls, “They were drawing water from almost a sewage canal, putting it in the sun for odor, filtering it with a cloth for dust, and once the odor was gone, they started to drink it.”

Today, Naandi Water sets up water purification systems in such communities and sells the purified water back to families for a nominal charge, about $2.50 per month. The model relies on community ownership from day one so the villagers can ultimately run the water center themselves.

Even with the company’s success, scaling on a national level proved difficult without increasing costs. That’s when Yachamaneni explored a new strategy: selling bottled water to urban consumers to subsidize their work. While she was met with intense resistance by those who thought the plan veered from the NCWS mission, she ultimately prevailed. And the tagline on each bottle reinforces the strategy: “One hundred percent of the profits will go to supporting those people in rural India who don’t have water to drink.”

Listen to how Yachamaneni’s entrepreneurial persistence and Naandi’s strategic pivot have paid off, creating more opportunities for safe drinking water in rural communities.

Grit & Growth is a podcast produced by Stanford Seed, an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.

Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.

Divya Yachamaneni: The team is extremely passionate. Most people that are working in the sector, in the organization, are very, very passionate about what we are working for. To make that shift and say, “You know what? To survive, we will need to start looking at the urban rich,” was very, very difficult, and they felt like we were moving away from our mission.

Darius Teter: Welcome to Grit & Growth from Stanford Seed, the show where Africa and South Asia’s intrepid entrepreneurs share their trials and triumphs.

Just a few announcements before we get started. As the world has reopened to travel, I find myself on the road again. In the past two months, I’ve been to Indonesia, Kenya, South Africa, and India, meeting with entrepreneurs and preparing for future cohorts of Stanford Seed’s transformation program. Unfortunately, that also means less time for podcasting, so we’re changing up the release cadence of Grit & Growth. Instead of once every two weeks, we’ll be putting out an episode once every three weeks. This will allow us to keep making great shows while we run our training programs, connect entrepreneurs across the world, and do all the other things that make Stanford Seed special. And speaking of special — for the next few episodes, we’ve got something a little different for you.

Starting or growing a business — it’s a unique experience. There’s nothing else quite like it. It can be incredibly draining and yet thoroughly rewarding, and no one knows what you’re going through like another entrepreneur. So as we gear up for our third season, we will bring you entrepreneurs in their own words, a series of four short-form stories and interviews told by entrepreneurs themselves. We hope you’ll see your own experiences reflected in these conversations and that these episodes will motivate and celebrate the work of entrepreneurs like you. For our first installment, you’ll hear from Divya Yachamaneni, CEO of Naandi Community Water Services. Divya was a consultant with Deloitte before she transitioned into the world of social entrepreneurship. We’ll hear how Naandi developed a model to bring clean water to rural India and how Divya pivoted the strategy to make it sustainable despite some internal resistance.

Divya Yachamaneni: Hi, Darius. I’m Divya, and I am the CEO of Naandi Community Water Services. We usually refer to it as Naandi Water. So Naandi Water is a for-profit social enterprise. The mission is to save lives by providing safe drinking water to underserved communities in a sustainable manner. And Naandi Water at this moment works across seven states in India. There’s an incredible amount of money that is spent every year for building water infrastructure in India. However, we don’t reach most of our goals because it’s extremely centralized. Even now, 78 percent of India does not have piped water. And even if they do have piped water, a lot of times nobody can guarantee the quality of the water. There is no ownership amongst communities. So year after year you pour in money, but there’s constant slippage. The infrastructure remains dilapidated, etc. As recently as 2017, I remember there was one particular day when 11 people died because of bad water.

Darius Teter: So can you describe for me the first time you went to visit one of these villages that had been targeted for a water plant? I’d like to hear in your words the problem that Naandi Water is solving, through your eyes, from your own travel.

Divya Yachamaneni: So I am an urban girl. I’d hardly ever been to any villages before I joined Naandi Foundation. I remember it was such a huge shock for me because, being somebody from urban India, I hadn’t realized how bad the problem in rural India was and just how contaminated the water is. It’s impossible to drink it. There is one particular village in Rajasthan. It was amongst the first villages that I had gone to visit. People were drinking water from the ground, which was extremely highly contaminated with fluoride. There was actual white foam on it because it was that contaminated, and they were drawing water from that. It’s almost a sewage canal. They were drawing water from that, putting it in the sun for odor, filtering it with cloth for dust, etc. And once the odor goes, etc., they started to drink it.

And I remember really being very moved by it and it was very difficult to see people living in those conditions. So what is the model? We go to places with extremely highly contaminated water that have high nitrates, arsenic, TDS [total dissolved solids], etc. We go to these places. We set up a water center, a water purification system. We purify the water and we provide it back to communities at a nominal charge. One family pays $2.50 per month for safe drinking water. In our model, the way we worked it is that from the beginning, the community has to take ownership. So how do they take ownership? The first thing, even at the time of the construction of the water purification center, we won’t go in unless the community promises to provide us with land, raw water connection, and electricity connection.

Darius Teter: Sorry, let me just jump in here. I used to finance irrigation projects, and the problem there was that the community didn’t have any ownership of the project. It was just something that was given to them. And so operations and maintenance never really kept up.

Divya Yachamaneni: Exactly.

Darius Teter: I would travel around rural areas and I would see these projects where the European Union had proudly put a plaque on it, “built by European Union” two years ago, and the damn thing was busted.

Divya Yachamaneni: Yeah, exactly.

Darius Teter: So the whole model of, “Here villagers, we’ve given you this great thing, best of luck,” never really worked.

Divya Yachamaneni: Exactly. So from the beginning there is ownership from them. Then we work together for five to seven years, during which time we train one person from the village itself to run the water center. We do a lot of educational campaigns, a lot of awareness building, and after this, after seven years, we hand it back to the communities, usually to not one person, but to the village government for them to run the water center themselves. So we have so far handed back about 329 water centers, which is in 329 villages, and about 80 percent of them continue to work even now.

The latest project that we have set up is in Maharashtra, and this is with two years of work. We provide water to schools. So we’ve seen that absenteeism has dropped from 24 percent to 2 percent. We have seen that medical expenditure for waterborne diseases has fallen from 50 percent to 13 percent. We have seen that the drudgery on women — that is because usually they have to walk for one to two kilometers carrying 20 liters. But from the time the water center has come in, about 40 percent of the time it’s the men that actually come and pick up the water because it’s no more just the women’s work.

When we began, Darius, there was absolutely nobody else that was doing this. So we were the pioneers of this model. We were the ones that actually demonstrated it on a large scale. But by 2012, we realized that there is a whole lot more that we need to learn because we set up with state governments, which means we have scale, but we didn’t necessarily have everything properly sorted out.

So far we do cover all costs up to the state level, but we didn’t want to take grants for the national level costs. And so in order to do that, we realized that if we can’t increase the price, that’s going to be very difficult. We knew that we needed to be sustainable while providing water at the same affordable cost. So we explored various ways in which we could do it. We said, “Okay, let’s just see if we can get economies of scale in the same model.” We tried that, but it didn’t work. Then we said, “You know what? Urban areas, we seem to be earning a whole lot more than rural areas, so let’s see if that could help us increase our revenues and cover all our costs.” We tried it for two years, but because of regulatory aspects, as well as the changes in law, even that didn’t work. By then, we were like, “It looks like the most likely way in which we could be sustainable is through this cross-subsidization.”

Darius Teter: The bottled water is sold on a commercial basis.

Divya Yachamaneni: Yes.

Darius Teter: The profits cross-subsidize the rural water schemes.

Divya Yachamaneni: Yes.

Darius Teter: That’s a pretty big strategic pivot. And I’m just curious: Could you just say a few words about what was the process that got you to introduce this new product? Because that’s quite a big shift in strategy.

Divya Yachamaneni: I was one of the people that was, from the beginning, really convinced that this was the way to go because I had done a lot of research on rural retail by then, and we saw how much money goes in there and how very few organizations have been able to cover all national costs. And we had even reached a place where nobody else had reached by then. But to go further was going to be difficult. So I was quite convinced that we will need to look at it from another perspective.

Darius Teter: And within your team, was this strategy debated? Was there a challenge?

Divya Yachamaneni: Hugely. It was very difficult for me. It took me a very long time to discuss and get the team on board about the whole urban model for initially the middle class and then the rich. Because they kept feeling like we were moving away from our mission. The team is extremely passionate. Most people that are working in the sector, in the organization, are very, very passionate about what we are working for. So this took me almost two and a half years of constant conversations, discussions, debates, some people even leaving from the leadership team before it became a part of what we do. Over the last two years, through various conversations with the customers as well as really understanding the market, we saw where we could differentiate ourselves with quality of water and service as well. Right now it is India’s only social package drinking water brand. The brand is called I Quench and with a tagline of “This water is good for you, good for society, and good for the planet.” Because 100% of the profits will go to supporting those people in rural India that don’t have water to drink.

Darius Teter: And I’m just curious — so has your hypothesis proven true? Is this business, are you in it for the long haul?

Divya Yachamaneni: So we have a fairly differentiated product right now that we are seeing more and more people like quite a bit. At the end of the year, last year, we quickly switched consumer segments to B2C [business-to-consumer] and we were able to do about 42 percent over the previous year. And this year, again, we grew about 62% in the last two months over the previous year. So we see that there is a demand for good, safe drinking water that is unadulterated. And what adds to all of this is the fact that people feel like, okay, I get to have good water, and then some people in rural India are also going to benefit. So I do think we are going to be in this for the long haul.

Darius Teter: It’s exciting to know that Naandi’s strategic pivot has paid off and they can continue to fund their work in rural India. It’s a reminder that different approaches can serve the same mission. For a social enterprise, success isn’t about dominating the market, it’s about fulfilling the need. And since Naandi pioneered their model, others have followed, creating more opportunities for safe water in rural communities.

Divya Yachamaneni: Once this model was demonstrated on a large scale, several other state governments then adopted the model. The central government adopted the model. Banks started to give out loans to entrepreneurs that wanted to set up a water center. So right now, this model is fairly well known in the country. And, in fact, a lot of other countries in Africa are also using the same model.

Darius Teter: I want to thank Divya Yachamaneni and Naandi Community Water Services for sharing her story and for the impact she’s having in India. Since we last spoke, Naandi has opened an additional six water centers for a total of 335 that have impacted more than 700,000 lives across India.

This has been Grit & Growth with the Stanford Graduate School of Business, and I’m your host, Darius Teter. If you like this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs in Africa and Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast. Grit & Growth is a podcast by Stanford Seed. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.

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