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A Time For Reflection

an occasional bulletin of news from “the distant village” September 2008

Five years ago, infrasys was founded with the specific goal of investing in rural India...to help cause a change. It was established with a simple premise that, if life in rural India was to be become physically and economically viable, then creation of economic opportunities in the villages was essential. Towards this end, we committed ourselves to bring to rural areas, the ingredients for enterprise - the required physical, knowledge and financial infrastructures.

Past issues of this bulletin have highlighted the projects we have invested in and related news. In this we look back, note successes and identify failures. We will focus on lessons learnt about many aspects of rural life in India. Finally, we will look at the potential of our mission, the methods we intend to adopt and paths we wish to tread in the future.

We have no illusions that our efforts alone can bring change to the lives and conditions of the poor in rural India or that ours is the only solution. All such efforts cannot have substantial impact, unless public policy is moulded to guarantee access to health, nutrition, housing, education and economic opportunities; to remove the unjust inequities in society and to preserve the very environment on which all life depends for sustenance and survival. This is integral to our mission and responsibility.

Fifth Anniversary Issue

the tele.graam

i n f r a S y s ... investing in rural India ... for a change 1

FERTILIZERSThe story of Shri Lingappa, (right in photo) from the village of Nagarle, warrants a separate issue in itself. He, the first infraSys vermicomposter, started with 2 units and today has 12 in full production. He has obtained loans for the additional 10 from the very Co-op Bank which had turned him down before infraSys invested in him first.

His enterprises, along with composting, (which he uses on his own land) include sale of worms and milk and these make his income well above

the local average. He is also generous with his time and expertise, teaching others the methods of compost production. He has made improvements to his home and has constructed a shed for his growing herd of milch cows.

Many amongst the 45 infraSys composters (spread in Mysuru and Dharwar districts of Karnataka) have made themselves self sufficient in fertilizers and find composting financially rewarding. Not all.

Take for instance, Padmini and her husband. Their income came primarily from manual labor - hers from agricultural work and his from construction. Being landless, they could not use the compost themselves and had to sell it in the open market.

They did this successfully for some time. Today, however, they live with their daughter and son-in law (she was married at 16) in Bengaluru finding urban opportunities more lucrative and attractive.

For the small landholder switching from chemical to natural fertilizers is never easy, since yield is often lower during this transition.

SOLAR ENERGYIn 2004, infraSys invested in the installation of 10 solar powered street lights in Kottapalayam, Coimbatore district in Tamil Nadu.

This was a collaborative effort between the Government of Tamil Nadu, the panchayat of Vavipalayam and infraSys. The 50% subsidy that the GoTN offered for such installations, has since been discontinued.

This is the only renewable energy project we have invested in, even though we will continue to seek other opportunities.

SEEDSWe devoted an entire issue of “the tele.graam” to seeds and their significance to agriculture, horticulture and our food supply. Briefly...a Pilot Program, with about 100 farmers was started as a joint venture between JSS Rural Development Foundation and infraSys for the production of seeds to address the chronic shortage of seeds in Mysuru District, Karnataka.

Considering the success of the Pilot, the Governments of India and of Karnataka expanded this statewide and incorporated the pilot under the SGSY Scheme.

✤Today, there are 5,035 seed farmers, 4224 of whom grow agricultural seeds, 605 horticultural and 206 sericultural (silk).

✤Statewide, almost 4,000 acres produce these seeds and saplings in a total of 492 villages.

✤ Agricultural seeds include - rice, raagi, bajra, groundnut (peanut) soybean and red, green and black grams (pulses). Horticultural seeds cover both fruit and vegetable seeds and saplings.

✤ To assure quality Seed Processing Centers operate in every district; Karnataka State Seed Certification Agency offers certification.

✤ Such seeds are purchased by local farmers and by National Seed Corporation & Karnataka State Seed Corporation and in some cases, by private seed distributors.

✤ Even though these seeds are preferred by many local farmers who recognize their superior quality, there is competition from the subsidized seeds offered by governmental organizations. These seeds however, are cheaper than of those sold by multi national corporations.

✤ The seed farmers, earn on an average Rs 7,500/-per acre, per crop, per farmer - in addition to other incomes.

✤ The production of seeds has secondary economic benefits. A new set of income generating activities - harvesting, threshing and transportation - are created, further boosting the local economy and providing much needed employment to local labor and skills.

✤ The impact of this program is felt not only in additional income for the seed growers but in increased availability of quality seeds, locally and on time for planting.

✤ In spite of these efforts, the seed demand is not being adequately met and much more to be done for this vital component of the food supply.

TRANSPORTATIONConsidering the steep and steady increase of crude oil prices (which is likely to continue) and of the associated costs of refining and delivering petroleum products, simpler and “ancient “ modes of transportation may begin to make sense...where appropriate.

infraSys’ investment in bullock cart transportation began before the recent increases in oil prices. Two years ago we invested in 7 bullock cartmen. infraSys made them whole, linking missing animals with

carts, or vice versa and repairs where needed. (Photo left, courtesy S. Ramkrishnan)

These men, from scattered villages near Madanapalli,

Chittoor District in Andhra Pradesh, offer transport for hire and cart tomatoes to construction materials. Some also use their animals to plough fields for hire.

Six more were added a year later and today 13 infraSys cartmen ply their trade. Before investing in the second group, we made sure that there would be no undue competition and that they would be operating in geographically independent areas.

The cartmen have formed Self Help Groups, have established joint bank accounts, keep meticulous accounts of their own businesses and meet once a month to transact finances and to exchange news.

With an average net monthly income is Rs 3,000/-their lives have improved considerably. Some have built homes using their savings combined with loans.

This project has had and continues to have multiple effects on the local economy generating livelihoods and income for many beyond these cartmen.

✤ The cartmen’s income is derived primarily from the local customers.

✤ The animals are bred locally; the wood for the cart is grown locally or nearby and the cart makers are also local - each benefiting in the process.

✤ Fuel for this transportation is not imported from the Middle East! Fodder is locally grown and its sale to the cartmen, again generating revenue.

✤ Currency too circulates locally multiple times!

✤ This emphasis on the local is an essential component of the infraSys methodology.

A summary of some projects we have invested in over the past 5 years. t h e t e l e . g r a a m

i n f r a S y s ... investing in rural India ... for a change 2

ENERGYWhen addressing the energy (fuel) requirements of the very poor we must start with two basic needs - cooking and lighting.

It is unrealistic, both in terms of supply and costs, to rely on petroleum based fuels - gas (piped or in cylinders) and kerosene - to satisfy the basic energy needs of the poor. The present subsidy by the government of all petro fuels, primarily benefits the affluent and is not likely to reach the vast population of India on any widespread scale.

Even the cost of transporting such fuels will make their delivery ineffective from cost and energy perspectives.

infraSys will explore and invest in decentralized, local energy systems. They include energy from biomass (firewood), biogas (from cow dung), sun and wind - all of which are renewable, local and have lower capital costs than the alternatives.

Improved stoves that burn firewood more efficiently and burn without smoke will become part of our efforts in the energy field.

WATERinfraSys is unilaterally opposed to privatization of water. Considering this, the only investments we will make in water will be in methods to improve the quality and efficiency of its use. Our focus:✤ Systems, kits and methods of improving the quality of potable water.✤ Efficient irrigation systems and technologies✤ Construction of dry or composting toilets (which will save over 9,000 liters of water per family of 5 per year @ 5 liters per flush)✤ Harvesting technologies and method

We plan to explore a variety of tools and techniques which will reinforce local control of water.

WASTEA community’s health (& wealth) is determined by the ways in which it deals with its waste. At infraSys, we recognize that waste should not be the terminal product of a process but part of a continuum in which waste becomes useful again.

We plan to continue investing in vermicomposting and other methods of producing organic manures from animal and agricultural wastes.

We intend to invest in the promotion and construction of dry compost toilets to promote and provide sanitation in the villages.

As noted under “WATER” (left), the wet sanitation system (water transporting fecal matter to a septic tank or sewage plant) wastes preciously scarce water, needed for other more vital uses and needs. In the dry compost system, both fecal matter and urine eventually become useful as fertilizers.

We intend to scrutinize all our project activities to minimize waste and implement recycling and convert waste to usefulness.

HEALTHHealth is the foundation of life and how well we develop as a society depends on the health of individuals, communities and the public at large. India is home to 40% of the world’s severely malnourished children under 5. India ranks 126th from the top (out of 175 nations surveyed) in Human Development Index in the 2006 UN Development Program Report.

The Green Revolution’s emphasis was on carbohydrates - rice and wheat - at the neglect of protein - beans and pulses. Protein deficiency is a health issue.

The Green Revolution’s methods resulted in the depletion of soil quality and the poisoning of water. Both are health problems and today, plague the regions where this revolution flourished.

Schooling becomes irrelevant if a child’s brain has not developed due to malnourishment. A woman cooking with firewood in a smoke filled room is at risk, as are her children. Undernourished adults in poor health, cannot be productive at work.

Health care is a colossal problem that can be tackled effectively ONLY if the governments decide to address this on a high priority basis.

At infraSys, we are adopting an approach in which health issues will play a prominent part.

LIVELIHOODSLivelihood is “a means of securing the necessities of life”. The creation of secure livelihoods is part of infraSys’ investment goal. This is best achieved by creating opportunities for the primary production of goods and services in villages.

This is a different approach from the one that sees the rural poor at the bottom of the pyramid simply as consumers - for the making of fortunes by corporations, both Indian and transnational.

We at infraSys see villages and the rural population as both producers and consumers. This opens up many investment possibilities to create productive enterprises and livelihoods.

Micro-credit or finance alone is not enough to create business opportunities at the poor, rural level. Much of rural borrowing goes to pay for medical, marriage and other personal or consumer needs.

Setting up an enterprise requires more than just money. It requires research, analysis and planning. infraSys does this for each project.

FOODConventional agriculture relies on nonrenewable resources - for nutrients (chemical fertilizers) and pest control (pesticides and fungicides). While depleting soils of their vitality, this model also pollutes water and poisons life.

To be sustainable in the long run, agriculture and horticulture have no choice but shift to organic methods and use renewable resources to enrich soils, control pests and eliminate the poisoning of water and life.

It is our goal to encourage non poisonous and organic farming practices. We also intend to revive millets in rural diet as alternative to rice (polished) and wheat (without bran).

Today, the food sector includes the conversion of basic foods to processed and “taste” added products. Such foods unfortunately do not provide nutrition and (perhaps fortunately) are out of reach for most.

At infraSys we intend to revive simple and traditional methods of value addition and preservation of foods.

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i n f r a S y s ... investing in rural India ... for a change 3

The success stories one reads about farmers, are about those with 5 or more acres of land; growing cash crops and making much money. Such stories rarely involve basic food production, which cannot be ignored.

The marginal or subsistence farmer who grows food, measures yield in rupees and not in tonnage per acre. He is trapped in a cash economy in which he, the grower of perishables, is the weakest player.

Today, most villages in India are not isolated. Communication and transportation have changed this. However, the rural-urban chasm remains big and is widening, creating more inequities in society.

M. Ramamurthy, my friend (and a shareholder of infrasys), observes that there is an “...imbalance in the rural urban trade exchange which weighs heavily against the rural economy...” He also identifies health care and education as “...the most draining expenses...” of the rural people. My friend Vasant Deshpande says a “spectrum approach” is needed. They are both right, of course.

As a part of the next phase, we are working on creating Rural Economic/Environmental Zones (REZ) in which we plan to invest in new enterprises and integrate existing economic activities into a network of mutually beneficial exchanges.

I want to thank our shareholders whose investments and faith in this approach have made all this possible. As we take the next steps on this journey, I invite you to join us and become an agent of change.

murthy sudhakar for infraSys

PARTNERSWe have been fortunate in working with organizations and individuals who were willing to collaborate with us, bringing to the projects their expertise and enthusiasm. We thank them here.

Padma Shri Dr. M. MahadevappaDirector - JSS Rural Development Foundation, Mysuru, Karnataka

Prof. Shankaregowda & Dr. B. Hulgur, former & current Training Organizers of JSS Krishi Vigyan Kendra, Suttur,, Karnataka

Jamuna Urs, Manjunatha Angadi, Pampanegowda and Arun Pandit, Subject Matter Specialists (some current and some former), JSS Krishi Vigyan Kendra, Suttur, Karnataka

Dr. S.D. Kololgi, former Head & Dr. Jitendra Hilli, current Head ofKrishi Vigyan Kendra, UAS, Dharwar, Karnataka

Balla Jayanna, President, Rural Reconstruction Society, Angallu, Chittoor District, Andhra Pradesh

Senthil Arumugam & Sundaramoorthy of Sindhanai Sirpigal, Tamil Nadu

LINKSPAGE 2

FERTILIZERVermicomposting

ENERGYSolar Street Lights

SEEDSSeed Villages

TRANSPORTATIONBullock Cartmen

PAGE 3 ENERGY

Smokeless High Efficiency StovesWATER

Dry (waterless) toiletsFOODMillets

LIVELIHOODSFlower Growing & Micro-finance

HEALTHRural Health

Corporate Social Responsibility is not about mopping up after a spill or making attempts at neutralizing the ill effects of operations and of products manufactured or the simplistic appeasement of communities wronged by corporate deeds.

CSR is a conscious way of doing business which involves the sustainable management of resources, energy and waste;

prudent methods of producing food; creation of livelihoods and caring for the health of people, communities and the

environment.

t h e t e l e . g r a a m

the tele.graamis the official news bulletin of

infraSysEco Management Private Limited1373 24th Main, BSK 2nd Stage, Bengaluru 560 070, India802.671.0421Visit: www.infrasys.bizEmail: infrasys.biz@gmail.comor info@infrasys.biz

INVEST IN infraSys

Please visit the website to learn more about our company, the principles

that guide us and our mission.

If you see merit in what we are attempting to do and in our

approach to conducting business in rural India, please consider investing

and buying infraSys shares.

Please write us and we will send you more information.

i n f r a S y s ... investing in rural India ... for a change 4

REZ If you want to learn more about Rural Economic/Environmental

Zones - REZs - (middle column this page), please contact us.

The Path Ahead...