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Bamboo House India: Effective Project

Management?

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Due to uncontrolled exploitation of natural resources and poorly planned developmental

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activities the world today is facing severe environmental problems Various entities like
government, non-governmental organisations, philanthropists, human right activists, etc., are
intensifying their synergic efforts to maintain the sustainable development and encourage eco-
friendly products as the existing practices lead to severe environmental degradation. However, the

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results of these endeavours are yet to be seen. In this context, social enterprises1 (both for-profit
and non-profit enterprises) have a significant role to create awareness. Bamboo House India (BHI)
is one such social enterprise, established to encourage ‘Green products’ and promote ‘Green
livelihood’ for rural artisans.
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Bamboo House India: Creating Green Livelihood

Bamboo House India (BHI), a social enterprise which uses bamboo as an economic driver, was
established in 2008 by two first generation entrepreneurs, Prashant Lingam (Prashant) and Aruna
Kappagantula (Aruna), in Hyderabad, India. BHI was setup with an aim to create a long-term,
sustainable and non-migratory livelihood for the rural and tribal artisans in the bamboo sector. The
couple initiated ‘Green Livelihood’ – an initiative that recognises and values the importance of
preserving the environment in its current form and helps in reversing environmental impact and
generating livelihood.

1
Social enterprises are social mission-driven organisations, which, in order to achieve social purpose; apply mostly market-based
strategies. Social enterprises include both non-profit and for-profit organisations. Non-profit organisations use business model in
order to pursue their mission whereas in for-profit organisations, the primary purpose is itself social. The aim of these social
enterprises is to accomplish targets that are social, sometimes environmental and even financial.

This case study was written by Dr. V. Srinivas, Raga Sravanthi Vemulavada and Sowjanya Mora, IBSCDC. It is intended to be used as
the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was
compiled from published sources.
© 2010, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the
permission of the copyright owner.

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Bamboo House India: Effective Project Management?

Exhibit I
Market Potential of Bamboo Sector


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The Indian Government is planning to consider bamboo as major export item for a
global market value of INR 500 billion ($11.9 billion)
 Indian Government is planning to concentrate mainly in the north-eastern part of the
country which would constitute about 27% of the world market by 2015
 Indian Government is aiming to create around 8 million jobs in the bamboo industry,
which in turn will help in lifting 5 million families out of poverty. By doing this, the

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government hopes to reduce the migration of rural workers to urban areas for
livelihood
 The Planning Commission of India launched the National Mission on Bamboo

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Technology and Trade Development. The objectives of this Mission are to launch
several initiatives by focusing on bamboo as a key species and conducting research in
the development area.
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Compiled by the authors from http://planning.up.nic.in/innovations/inno3/fw/bamboo.htm

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BHI’s main objective is to connect the tribal artisans with the mainstream market and
concentrates on using locally available bamboo in order to develop contemporary lifestyle
products that suit the market tastes and demands. The company identified that the bamboo market
has a great potential and if properly tapped, can provide 5 million people with livelihood. BHI
promotes viable financial, social and environmental solutions to the rural poor without people
migrating.

However, BHI commenced fortuitously, as the founders never intended to start a

entrepreneurial venture and were oblivious of the market potential of bamboo and its products.
The couple wanted to buy some furniture for their home and desired to have something that is eco-
friendly and finally zeroed in on bamboo furniture. Since they were not satisfied with the locally
offered bamboo furniture designs, they browsed the Internet to know about the bamboo furniture
outlets in India. They learned that bamboo furniture in India is being imported from countries like
China, Indonesia, Malaysia, etc., at high prices ranging above INR 1 lakh ($200) and is only
confined to high-end customers in the metros. After a rigorous search, they found that people in
the north-eastern states of India, make bamboo products and more than half of the population’s
livelihood depends on bamboo. This triggered them to look into the dynamics of bamboo sector
and learn more about bamboo products.

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After a thorough research, the couple came to know about the bamboo artisans of Katlamara, a
village in situated in Tripura located on the Indo-Bangladesh border. Therefore, in order to know
what is needed to make good quality bamboo products and analyse the artisan skills, they travelled
to Katlamara. Having observed the wide range of bamboo products and their usage, the couple

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decided to establish a business in the bamboo sector. Prior to the starting their business, they
studied the domain area for 6 months and did a meticulous research on its marketability. Being
novices in business, knowing the risk factor was very essential for them. Though investing in an
untested business was risky, the duo stepped ahead without bothering about return on investment.
Before setting up the business, they travelled across India – especially the north-east and met
many bamboo artisans. They learned that the artisans were highly skilled and few of them had

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even received awards from the President of India and UNESCO. However, these artisans were not
fairly paid and had to do petty jobs to meet ends.

The founders even learnt about the cultivation, harvest, treatment process of bamboo and also

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the problems related to its cultivation. They found, through research, that bamboo can save our
planet in 10 different ways. They studied the nature and characteristics of bamboo trees and found
that it helps in the regeneration of the environment as 1 hectare of bamboo can lessen 62 tonnes of
CO2 per year when compared to 15 tonnes of CO2 per year by forest (Annexure I). They also came
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to know that at any given point of time, bamboos develop cracks and they can be controlled if
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proper care is taken from sapling to harvest stage. Besides, they identified the legalities and
regulations in the bamboo sector.

Bamboo, originally a grass, under the Forest Act 1927, is treated as an equivalent to a tree and
needs special permission from the Forest Department to be harvested. Other regulations of the
Forest Conservation Act 1980 and Dwellers Act 2006 are also applicable to bamboo. The Indian
forests fall under the concurrent list of constitution where both the State and Central Governments
can enact their laws. Bamboo is harvested across the world but it is limited in India. Even if
bamboo is grown in private lands, the law does not permit its harvesting and transportation.
However, it was identified that Tripura is the only state where private cultivation and harvest of
bamboo is allowed. It is home for the artisans and also the best bamboo species – Thrystostachys
Oleverii or Kanakais – available in the world. It is flexible, with a diameter of 15–55 mm at the
base, with a height of 60–80 feet, which is achieved in 4 years and is suitable for furniture,
handicrafts and building houses. Due to the availability of bamboo only in selected places, BHI is
finding it difficult to connect the artisans. The two varieties of bamboo that BHI works with –
Aleverii and Balcoa – are available in Tripura and the other north-eastern states of Nagaland and
Mizoram while another variety of bamboo named Stricter is available in parts of Andhra Pradesh.

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In the initial stages of their research, the duo discovered through the Planning Commission
report-2003, that the estimated market demand for bamboo-based products in India by 2015 is
around INR 45,000 crore, of which bamboo furniture is estimated to be INR 3,625 crore and
bamboo housing market stands at INR 1,100 crore.2

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Before starting the business, to study the market feasibility, they conducted an exhibition of
bamboo (furniture and life style) products, with the support of Andhra Pradesh Technology
Development and Promotion Centre (APTDC). It received very good response showing a great
market potential. This further encouraged Prashant and Aruna to go ahead with the business.

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Initially, as part of their business, BHI developed a project plan comprising all the proposed
activities that must be completed as per schedule for the timely completion of the project. The plan
describes the various phases of the project and deliverables at each stage. BHI developed a
network of project activities to execute them properly without any time lapses. Initially, they

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planned to execute all the activities sequentially but found it to be time-consuming and also
expensive. Then, they reviewed the possible project networks for their proposed project. The total
activities identified in the project, their time duration, the preceding condition of all the activities
are shown in Exhibit II. If the proponents execute the project activities in sequence, then the total
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time duration for execution of the project is 415 days. Hence, eventually, the proponents
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developed a suitable project network, which helped them in reducing the total project execution
time, significantly.

Exhibit II
Project Network Information for Bamboo House India (BHI)
Activity Description Preceding AD
(AID) Activity (Days)
A Market Study & Conceptualization of the Idea --- 80

B Project Definition A 45

C Resources Planning A 30
Contd…

2
“Interview conducted with the founders of BHI, Prashant Lingam and Aruna Kappagantula, by Raga Sravanthi Vemulavada and
Sowjanya Mora, IBSCDC, January 20th 2010

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D Customer Acceptance Plan B,C 30

E Communication Plan D 30
F Financial Plan E 10

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G Quality Plan E 30
H Risk Plan E 10
I Market Awareness Plan & Identification of Buyers Market F,G,H 30
J Branding I 20

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K Franchising I 30
L Logistics J,K 30

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M Expansion L 40

Total duration of all the activities 415

AId: Activity Identification; AD: Activity Duration

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Source: “Interview conducted with the founders of BHI, Prashant Lingam and Aruna Kappagantula, by Dr.V. Srinivas”, IBSCDC,
January 30th 2010

Establishing a business model is very critical for any business and though the duo had enough
knowledge and planned for a structure, establishing a business model was not a stress-free task.
Since the couple had no idea as to how the business operations needed to be carried out, they
decided to collaborate with institutes which were already working in the bamboo sector like
National Institute of Design (NID), National Bamboo Mission (NBM), National Mission on
Bamboo Applications (NMBA), Confederation of Indian Industry (CII), Indian Institute of
Technology (IIT-Delhi), Tripura Bamboo Mission (TBM), APTDC, Infrastructure Leasing &
Financial Services (IL&FS) and Andhra Pradesh Forest Department (APFD).

Aruna and Prashant observed that the government policies towards bamboo were very
conducive with NBM’s budget being more than INR 1,000 crore and NMBA budget outlay above
INR 500 crore.3 However, these policies did not provide any employment opportunities to tribal
artisans. Even institutions like National Institute of Design (NID), Ahmedabad, which discovered
the superior characteristics of Oleverii in 1976, could not create a sustainable livelihood for the

3
“Interview conducted with the founders of BHI, Prashant Lingam and Aruna Kappagantula, by Dr. V. Srinivas, IBSCDC, op.cit.

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artisans and restricted itself to training them in making bamboo products. Gradually, these NID-
trained artisans took up other work or migrated.

Even though enough attention was given by the government, neither the artisans nor the

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bamboo products could connect to the mainstream market due to lack of market linkages. It was
during this time that BHI chose to reverse the on-going process by handling both the supply and
demand sides of the product. They began adopting artisan communities in Tripura and gave them
creative freedom by not mentioning any specific time period in which the product has to be
delivered. Initially, convincing and communicating with the artisans was a big problem as
language was a barrier and artisans were apprehensive about the business. However, Aruna’s

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Bangla speaking skills were a saving grace and moreover, being provided with financial incentives
without any commitment for delivery of products for the next 6 months were seen by the artisans
as an added advantage.

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Yet another challenge was lack of mobile network connections and unavailability of telephone
booths in the close vicinity, which caused hindrance for the smooth work flow. Even today, the
company finds it difficult to communicate and explain the designs to the artisans. Usually, the
couple draws few designs on a paper and sends them through post, which takes almost 20–25 days
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to reach the artisans. The artisans start working on the design and they tend to put their own inputs
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into it as they do not understand the requirements of the market, which sometimes results in
deviating from the exact design. As such, the company does not maintain any specific quality
measurement scale but, “Yes, based on our domain knowledge, we prepared our own benchmark
for quality as there were no standards to follow; even today we have our own in-house quality
benchmarks,”4 Prashant added.

The operations of BHI start at the plantation stage itself. Plantations are done through the tissue
culture process wherein the bamboo takes 4 years to grow fully to make any product out of it. As
of now, the company is dependent on the forest resources and needs permission from the Forest
Department to harvest the same. The harvested bamboo then has to be treated to prevent it from
decaying. Later, it has to be shade dried for 90 days. Meanwhile, the artisans receive the designs
from the company, which considers customers’ specifications. Along with the designs, the artisans
are given the product quantity and 100% advance. The company is involved in complete value
chain, starting from selection of bamboo to the end product. It arranges raw material for artisans
through the Forest Department and supports them (artisans) at each and every stage. The artisans
work from two places –the Indo-Bangladesh border and Nagaland. Kashtam aiyna,,santhosam
aiyna...du

4
“Interview conducted with the founders of BHI, Prashant Lingam and Aruna Kappagantula, by Raga Sravanthi Vemulavada and
Sowjanya Mora”, op.cit.

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In the Indo-Bangladesh border, a group of 125 artisans (100 men and 25 women) work as a
single community on creating 60 new designs. The place is rich in the bamboo species, Oleverii,
which is thin (the diameter of the bamboo pole being less than or equal to 2.5 inches) and natural
in colour. This species is mainly used in making small items like bags, baskets, gift items,

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carvings, etc. In Nagaland, group of 30 artisans are working on creating another 60 designs, in
different places, in a radius of about 1,100 kilometers. The species of bamboo cultivated here is
black and bulky used in making furniture. These groups would take anywhere between 2–6 weeks
to make the product depending on the design and quantity. The movement of products from two
places – Nagaland and Indo-Bangladesh is as shown in Exhibit III

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Exhibit III
Transportation Cycle at BHI

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Prepared by the authors

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As transportation of finished products (Annexure II) in small batches is not feasible, the
products are kept in a storage area till the container is loaded completely. Then they are shipped to
Agartala and from there to Hyderabad. These shipments are done through various logistic service
providers – XPS, Gati, etc. The products are delivered to five showrooms – one each in

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Hyderabad, Visakhapatnam, Vijayawada, Mumbai and Chennai or delivered to the customers (like
resorts, restaurants) directly.

However, the transportation of the finished products costs more than double the cost of the
material used in making the product. Of the final cost of the product, 15% goes for transportation,
60% to the labour, 5% for material used, 5% for administration and the remaining 15% is

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distributed between the organisation and the franchisee. To minimise the high transportation costs,
the company decided to move the goods in a more economical way i.e., transferring through
locally available trucks.

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Though the cost is less compared to the organised means of transportation, the company is
facing many challenges (Annexure III) such as weight specification of 9 tonnes of load per trip. If
the load weighed is less than or more than 9 tonnes, objections are raised to transfer the goods.
Similarly, No Objection Certificate (NOC) has to be obtained from the Forest Department to ship
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the product from the place of production to the place of consumption.

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Apart from the high costs, another issue that grabs attention is the amount of damage that is
caused to the products during transit. Approximately 30% of the consignment reaches the
destination with damages. Although an artisan is called to fix the damages once in 6 months, it
costs nearly INR 20,000 to the company, which is much more than the current margins earned by
the company. The company is contemplating on strategies to reduce transportation difficulties and
the accompanying costs.

Annexure I
Bamboo – Its Advantages
Renewable Depending on the species, bamboo can be harvested in one to five years versus 10-50
Resource years for most softwoods and hardwoods. Thereafter harvests are possible every
second year for up to one hundred and twenty years the yield (weight per acreage and
year) is up to 25 times higher than that of timber Hardwoods like oak take at least forty
years to mature before they can be harvested. Almost 1 million acres of forests are lost
each week worldwide to deforestation. Bamboo's versatility as a substitute for
hardwoods offers a chance to drastically reduce that figure and protect the forests that
we have left

Contd…

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Absorbs greenhouse gases Bamboo absorbs carbon dioxide and releases 35% more oxygen into the
atmosphere than an equivalent stand of hardwood trees

Amazing growth rate Some species of bamboo grow more than three feet each day! No plant

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on the planet features a faster growth rate. When it is harvested, it will
grow a new shoot from its extensive root system with no need for
additional planting or cultivation

Very little waste After harvesting, virtually every part of the plant is used to make a wide
variety of products. From soil-enriching mulch to beautiful furniture to

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chopsticks, every part of the plant can be utilized

Versatility Bamboo can replace the use of wood for nearly every application.
Paper, flooring, furniture, charcoal, building materials and much more

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can be made from bamboo. What's more, bamboo fibers are far stronger
than wood fibers and much less likely to warp from changing
atmospheric conditions. No fertilizer, pesticides, or herbicides needed.
Unlike most cash crops, bamboo requires no agricultural chemicals to
thrive. Unlike cotton, which is one of the most intensely sprayed crops
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in the world and rapidly depletes the nutrients in the soil, bamboo
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sequesters nitrogen and cultivation does not add chemicals to the

environment

Soil protection Once hardwood forests are clear-cut and the stumps are burned to
provide fertilizer and space for growing crops, erosion inevitably occurs
as the topsoil and nutrients are washed away by rainfall. The eroded soil
then clogs rivers and streams and affects the lives of people and animals
living downstream. Bamboo roots remain in place after harvesting
where they prevent erosion and help retain nutrients for the next crop

Economic development In less developed countries where unemployment leads to civil unrest,
bamboo production and the manufacturing of bamboo products provides
job opportunities in areas that desperately need social and economic
stability. The market potential of bamboo is estimated to be 26000
crores by 2015 and if tapped in a proper way bamboo can help more
than 5 million of our population cross the poverty line

Bamboo grows in a variety of Bamboo can grow in arid regions where droughts cause other crops to
conditions fail and since the roots are left in place after harvesting, it helps to
preserve vital moisture in the soil. From low wetlands to higher
elevations in the mountains, bamboo thrives in a wide range of climates

Contd…

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Optimism and cultural In a fractious world where wars are fought over resources, the
cooperation increasing popularity of bamboo products provides an opportunity for
diverse cultures to settle their difference through trade and cooperation
that benefits everyone. Can bamboo save the planet? The answer to that

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question remains to be seen. But this amazing plant and its surging
popularity in a huge variety of products offers mankind a chance to
enjoy many of the comforts of modern life without causing irreparable
damage to our environment.

Source: “Why Use Bamboo”, http://www.bamboohouseindia.org/bamboo.asp

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Annexure II
End Products of Bamboo
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Contd…

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Compiled by the authors

Annexure III
Challenges that BHI Faces
Challenges Problem Description

Scalability The persisting problems with procurement of raw material, production, logistics, limited
finances, lack of a strong brand image, lack of proper distribution channels, etc., are posing
difficulties for the company to scale up.

Branding People are unaware of bamboo products and the brand. The company is in a dilemma as to
what is considered in branding –The products or community or the social cause?

Pricing The company doesn’t follow a standard pricing model and the price varies with product
design and customer specification. It has no methods of estimating the costs for customised
orders.

Contd…

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Logistics One of the major challenges the company is facing is the logistics cost. The logistics cost is
more than half of the product material cost. One container load is shipped in every 2–3
months and 30% of it is segregated as damage.

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Buyer Different customers prefer different types of bamboo products, so the company is finding it
Mapping hard to understand the consumer profile.

Distribution To achieve the desired results, the company should find as to which distribution model is
Model appropriate – franchisee, company-owned outlets or no-stocking distributors.

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Partnership Working with the industry and technology partners has benefited the company but at the same
Decision time, because of the costs it is facing a dilemma whether to continue or part ways.

Prepared by the authors

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