India has begun its inexorable climb towards the Japanese “valley of death”. The 60+ age group is the fastest growing demography. Birth rates are on decline and longevity is up. Japan hit those numbers a decade ago and have since been a nation struggling to cope with an ageing demograph.
The Covid outbreak and subsequent lockdown period was when Arcatron Mobility pivoted and successfully overcame a ‘”Death Valley” of their own.
For Arcatron Mobility –Arc stands for wheels and Tron for acceleration – the number that matters today is 110 million. That is the number of “senior” citizens (aged 60+) that exists in India.
Demographically, overall India is still a very young country, but 100 million is a big number – big enough to consider senior citizens needing assistance to carry out daily activities, which include walking, sleeping, hearing, and going to the washroom.
Ganesh Sonawane, Laxmikant Banjarey, Kunal Kamble and Dewaj Baruah started out as inventors. Today, these founders of Arcatron Mobility are businessmen, startup founders. The inventors have understood the monetisation aspect of the startup world and today, can claim to, like the company name, to have the wheels to accelerate to success.
In the beginning…
Sonawane, Banjare, Kamble and Baruah are NIT Calicut alumni. In college they began a club ‘Unwired’ and made a drone and radio-controlled aircraft. The “team” was born while bringing these projects ‘live’, they also got support from the institute.
However, venturing into wheelchair manufacturing was a case of serendipity.
Says Sonawane, “An NGO had come to our college and hosted a contest called Aavishkar. ‘Design for Disabled’ was the theme. When we participated in Aavishkar, where the prize was ₹30,000, we could not believe the videos shown to us. It was very simple problem statements; a disabled-women operating a wheelchair needing assistance to go to the washroom. Solutions for such problems were available in western countries decades ago, but in India it was unsolved. So, we developed a prototype and passed the design stage. We were offered a grant, but we were asked to form a company.”
The foursome avoided the early bite and believed they were not ready for the jump; and industry work experience was the calling.
“We were placed in big companies and got two years of hands-on experience. Later, we started exploring prototype building as a hobby. The idea was to convert a prototype into a product so that it reaches market and benefits people. We thought we will ‘IP’ it and give the licence to a manufacturer. While doing these activities we ran out of money and realised we had to raise funds. That’s when we approached big companies, but they were asking us business- related questions like, what is the market size? We were dumbstruck and had no clue on numbers and feasibility, cost…. Researching the market made us realise that this opportunity is big enough to explore the formation of a company,” Sonawane says.
Product ecosystem
Sonawane says it is not easy to build a company around a small niche like the disabled population in India. He adds, “The rehabilitation ecosystem is strong in countries like US, Australia, New Zealand, Europe and also the Middle East, because the products are funded by insurance companies there. In India, products are not covered in health insurance. So, we knew that starting for only this segment would not make sense in terms of viability and sustainability. Elderly needs are also valid, but the product-ecosystem is completely broken.”
“Even today, there is no good design for a walker in India. About 80 per cent products are still imported. That was the gap we decided to fill. We want a better world for ourselves, our parents and children. All should get better mobility devices when they need it. That’s why we started in 2015.”
Why only buy cheap (Chinese) or buy exorbitant (Eurpoean)?
Says Sonawane, “For the first two years, we were primarily doing only research and development. We also studied about other companies, including some abroad. There was no Indian company which had done any credible work in the wheelchair and other rehab products space. There were trivial innovations which had very low sales numbers. So, customers have only two choices, either buy cheap Chinese products or buy exorbitant European products. Both were not feasible.”
“We knew that if we had to form a substantial company, we had to break this stigma. How to break it? And, how will we know that we have succeeded? One data point was that if premium clients like top hospitals, rehab institutions, tech savvy customers from India, who normally would buy only high-end imports, buy from us. Second data point was if customers or dealers from richest and advanced ecosystems buy from us. Neither of these had ever happened in India. We had zero background of product development, but we wanted to get the first 50 or 100 customers from this category,” Sonwane explained.
“We picked up the shower-chair as a problem statement. We named it the ‘Frido-Go’ wheelchair which folds and fits into a suitcase and can be used for a shower as well as a multipurpose wheelchair for shorter period of time. We got 100 pre-orders even before launching. Most of them were from premium ‘Indian’ clients who were going to use Indian product for the first time. We also got orders from Canada, Europe, Israel, New Zealand, Luxembourg. The Paraplegic Rehabilitation Centre (PRC) at Khadki was among our first customers,” Sonawane stated.
Distribution: key bottleneck
The unconventional start worked for Sonawane and his team, but was short-lived. Says Sonawane, “We had a misconception; that we need to be innovating new products and we are sorted. There were a few early adopters, but that got saturated and was not scaling. We got 50 orders per month, but growth was stagnant.”
“Elderly customers are not active searchers. Wheelchair users are sparse and at different locations. Awareness is also less. In this segment, there are 5,000 distributors in our country who sell surgical equipment, but for them it’s a commodity business. We knew that cracking distribution for our innovative product is going to be hard. Marketing and distribution were the key bottlenecks for us. So, we took an on-the-ground approach and decided to build a very basic product first. Everybody asks whether our chairs are motorised? That’s not relevant. Bathroom access was the problem statement we had picked,” said Sonawane.
Strategic inflection point
As is witnessed in the startup space, being good at innovation and not being able to scale is where 99 per cent of companies fail. Sonawane and his team also realised it, but managed to recover in time. The Covid outbreak and subsequent lockdown period was when they pivoted and successfully overcame what they call the ‘”Death Valley”.
“Before Covid, our online sales were dismal. We were trying to get distributors to sell our product, but they could not understand it. We had a wrong strategy at that time. Innovative products can’t be sold through commoditised chains,” said Sonawane while sharing his learnings.
“We had lot of dependency on China for spare parts. We started to feel the burn in November-December 2019 when our suppliers refused to continue supply. We did not have any backup. We started developing it, but by then Covid-19 came to India. There are 110 small-big parts in a wheelchair which are either procured or developed from 50 to 60 vendors. We do critical assembly and welding. All of that was not happening. After initial exemptions were given by government for medical equipment, we got the product up, but logistics was screwed. We could not track our products. We had to refund to customers. It was a strange experience and we realised that we can’t scale this product,” he added.
And… the pivot
Reading the history of pandemics led Sonawane to a strategic inflection point. He wrote a memo to his team saying: “This is war. If we don’t adapt to this situation we will not survive. We have to do something drastically different to get through this”. Arcatron team participated in the Covid Cawach initiative of central government and also won a prize of ₹50 lakh for the concept and design of domestic high-scale manufacturing machines with UV treatment for surgical masks. They then backed out since the “government was too slow” releasing the funds.
“We saw the inefficiencies in distribution of sanitiser and masks. We knew the manufacturers and saw that the distributors were looting. Utilising our supply chain expertise, I started with my family. We provided low-cost good quality masks at construction sites of my in-laws. First time we sold something that was not unique or innovative. We were just testing our sales and marketing skills. It was also a first time when we faced competition from big market players. In masks, we saw unique opportunity where the product was not proper and hence, we launched our own range of premium masks – ‘Frido’ – meaning ‘Freedom to do more’,” Sonawane said.
Online success
Says Sonawane, “Cloth masks had to be cleaned often and they were not comfortable for long use. People faced problems breathing. We solved all of it at once and launched copper and silver range of masks. They were comfortable and premium masks starting at ₹500. I took a personal interest and studied how Amazon marketing works. I started experimenting and within a week our sales started picking up. Within a month I felt that grip and our sales grew 5x. We cracked the online marketing bottleneck and now we are confident of launching any product and selling through Amazon. That was a new beginning for us. We understood how ‘direct to customer’ works and hence, we have a strong belief in future of commerce.”
“Now, we are balancing between some product lines which will be cash cows and some products where long-term investment is involved. We got cash flow positive in April 2021 and we are profitable on month-on-month basis so far. Before this, for five years we were burning and had to be dependent on external investors or raise next round to move ahead. For a company like ours which has a socially relevant goal for long term, it becomes difficult to depend on external investors where you have to multiply very fast. Now we have figured out our own multiplication. We are investing our profits in long-term innovations. When that happened, we found more investment opportunities,” Sonawane claims.
Funding
Arcatron Mobility has raised around ₹6.7 crore so far from Angel and Seed investors.
It received first funding of ₹1.5 crore in July 2017 from Indian Angel Network.
“Sudhir Mehta of Pinnacle Industries was our one of the first professional investors. Before that there was private friend and family network including Anup Hingorani, who were funding us. Mehta has also given us manufacturing support,” says Sonwane.
“Initially, I had individually invested ₹10 lakh and Laxmikant and Kunal had put ₹5 lakh each. I raised personal debt from banks and friends and family to invest in the company. Most of that was put in when the company was going through a different time and we were not able to raise money. So far Individually I have invested around ₹70 lakh in the company. I was the biggest investor in the company as the next big angel investor was about ₹30 lakh,” Ganesh informed.
King makers
Sonawane says, “Within a year, we have reached 3,000 orders a day (in June 2021) from 200 orders a day (in June 2020). With 300 orders per hour and 10 working hours, this rapid scaling pushed our limits from all ends. We realised that those who own the ‘market access’ are king makers. We are doubling and tripling in terms of our capabilities because that is the future of sales for all innovative products.”
Future plans
“We aim to be the market leader in mobility devices in India. We want to be known as the most trusted brands globally. Transit wheelchairs and standard wheelchairs are also scarce in market. Besides, we are looking to enter into affordable electric mobility for elderly and differently-abled persons,” says Ganesh Sonawane, co-founder, Arcatron Mobility
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