Chennai:Ravi Mundoli likes to say that his company, Nadhi Information Technologies Pvt. Ltd, was incorporated on the day Lehman Brothers Holdings Inc. went bust. That isn’t altogether accurate—Lehman imploded roughly a week later—but it’s a good indication of how closely,in Mundoli’s mind, the economic downturn has dogged Nadhi’s footsteps.
It isn’t that Nadhi’s flagship product—a Web-based management system for the long supply chains of construction projects—doesn’t make sense now.
Reinventing the basics: Kalyan Vaidyanathan (front) and Ravi Mundoli, Nadhi’s founders, at the company’s office in Mylapore, Chennai. Sharp Image
Quite the opposite, as Mundoli points out, “because there should be more emphasis on savings and efficiency now. But it’s hard to deny that the downturn, and especially in real estate, has had an impact”.
Nadhi was born out of a product that Mundoli and his partner, Kalyan Vaidyanathan, had originally developed for the American market. The pair, civil engineers both, had attended the Indian Institute of Technology, Madras a few years apart, and then worked at the same company in Boston. “Even after I came back to India, and when he was still there, we would be chatting, and one day he asked if I could help with something he was developing on the side,” says Mundoli.
That product was a resource management software for small sub-contractors such as electricians and plumbers. “In America, it’s a big deal to have a guy sitting idle, because you’re paying him overtime and so on,” Mundoli says. “We did it almost like a research project. But it didn’t really take off, and also, by that time, the US slowdown had started.”
After Vaidyanathan moved back to India, he and Mundoli rethought their work for the Indian market. “The feedback we got from the industry was that the real problems here lay in scaling and in project management,” Mundoli says. “So, we were looking to target builders and project management consultants—the smaller players in that segment.”
Nadhi’s product—“which doesn’t really have a cool, branded name as yet”, Mundoli says—is entirely a subscription-based service, available in its entirety online. That is designed to target, he says, “a huge space of guys who want these tools, but don’t want to spend Rs10 lakh upfront for licences to install and configure it on their systems”.
The first of Nadhi’s two online modules, a project management system, keeps construction schedules updated, factoring in delays and sending automated alerts about imminent milestones. “Say, you want to pour a slab next week, for which you’ll need to order ready-made concrete,” Mundoli says. “You can set up an alert over email or SMS to tell you that.”
The second module, which manages materials, can tie orders to project schedules and prevent pilferage—a tracking process that, he says, is woefully low-tech at the moment. Late last year, Mundoli met a young construction company executive with a moving complaint. “This guy had a master’s in construction management from the United States,” he remembers. “And he told us: ‘I use an iPhone to make my calls, and I still have to look at a 100-page notebook to know how much cement I have sitting on my site.’”
But for construction projects to be managed, there have to be construction projects in the first place. “Contractors we’ve talked to say there’s less work happening, and we’ve definitely seen leads go from warm to cold because of this slowdown,” Mundoli says. If this was 2007, he is certain that they would have had more customers; as of now, after four months of pitching, Nadhi has one confirmed client, based in Coimbatore.
The construction industry as a whole, says Ravindra Singh Verma, executive director (development services) at real estate service firm Cushman and Wakefield Inc., is a conservative one. “Even during normal times, firms will shy away from adopting anything that is different from the usual.”
In a slowdown, that quirk is exacerbated. “In a downturn, people are even more cautious, although pragmatically speaking, one should be open to looking at new ideas that offer a win-win proposition,” Verma says. “But that is wishful thinking. The way the construction industry has been hit in this particular cycle, it is something that truly scares people.”
Nadhi is still self-funded, relying on Vaidyanathan’s day job at i2 Technologies Inc. for its operating capital. “We tried to look for investors last year, and perhaps we over-emphasized that rather than acquiring customers,” says Mundoli. “But our cost of acquiring those customers is high—we have to travel, do a song-and-dance in front of them, and keep at it a few times.”
Over the course of those songs and dances, a realization has set in that Nadhi’s business model may have to be “articulated differently”. “We started off looking at construction, but now we will have to possibly reinvent and say that it’s not just for buildings, but also infrastructure, power, roads—anything with materials, basically,” Mundoli says. “We think that things might turn out to be better there. Public spending on this kind of thing will increase, which might sustain us in the short or medium term.”
Nadhi’s slowdown alternatives will also include looking at other geographies, such as West Asia, and innovative techniques of marketing, or what Mundoli calls “evangelizing the thing”. “We’re looking to hook up with academics, and maybe participate in a few workshops, and get the word out that way as well,” he says. Before the downturn, Mundoli had decided that he would give himself a year to see how Nadhi did; that period of grace may now have to be extended. He is, however, able to discern a silver lining.
“Some things get better—it’s cheaper to rent an office, for instance,” Mundoli says. “Also, like the shrimp farmers in Forrest Gump, the guys who last the downturn will be the strongest. In a boom economy, there are a million companies doing god-knows-what, and you can’t tell them apart. This is a good way to tell the men from the boys.”
This is the second in a series about entrepreneurs starting businesses during the economic slowdown. Next: A second-hand car advisory picks out the lemons.