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BW Businessworld

Dangerous Business

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In the red hinterland of Chhattisgarh, Jharkhand, Orissa, West Bengal and Bihar, business houses are engaged in a life and death battle. Roads are few and far between. Power supply is sporadic. Telecom network is patchy. Railways are ineffective. While this state of infrastructure — rather the lack of it — would have been a major impediment in other areas, it comes low in the hierarchy of challenges facing businesses operating in Naxal-infested areas.

It is topped by an all-pervading sense of fear and uncertainty. Consider this: between 2006 and August 2009, Naxal violence claimed over 2,200 lives in Chhattisgarh, Bihar, Jharkhand and Orissa — more than the combined death toll of all major terrorist strikes in India during the same period. In 2009 alone, 2,258 incidents of Naxal violence had occurred, resulting in 908 deaths, according to the home ministry.

Further, in most of the over 220 districts in 13 states where Naxalism is present, there is a complete breakdown of law and order. In most places, the Naxals run a parallel government. Add to this the threat of extortion and it is not surprising that a number of businesses have chosen to pay protection money to the dominant threats. Not surprisingly either, no one is willing to speak of this on record.

In Chhattisgarh alone, the Naxal movement has cost Rs 10,000 crore worth of business in the past 24 months. The Federation of Indian Chambers of Comzmerce and Industry (Ficci), said in a November 2009 report, "Just when India needs to ramp up its industrial machine to lock in growth and when foreign companies are joining the party, Naxalites are clashing with mining and steel companies essential to India's long-term success."

(BW pic by M. Rajendran)Their growing clout is hurting business activities of several big companies. National Mineral Development Corporation's (NMDC) net profits dropped by almost Rs 1,000 crore in 2009-10 due to a series of Naxal attacks on its facility in Chhattisgarh. In June 2009, the Naxals blew up a portion of Essar Steel's 267-km pipeline that carried iron ore slurry from Bailadila to Visakhapatnam. Since Essar sources its entire iron ore requirements for the pellet plant from NMDC, both the companies suffered. While it resulted in lower despatches of 4 million tonnes for NMDC, Essar reportedly suffers a loss of Rs 2 crore a day.

In Chhattisgarh's Bastar district, Tata Steel and Essar Steel are together acquiring 2,000 acres of land and investing Rs 17,000 crore for setting up their respective captive power projects. However, according to a senior Essar official in Bastar, that the government has failed to create a conducive business environment in Bastar.

Needless to say, doing business in conflict zones is full of dangers and difficulties. However, some businesses operate in such areas and reap profits, too. BW will zoom in on such companies operating in trouble zones in India as well as abroad. This week, we feature two small companies that are successfully doing business in the heart of the Naxal belt. Our reporters M. Rajendran and Anilesh S. Mahajan travelled to Chhattisgarh and Jharkhand, respectively, to report the ground realities.

Read on.

Maa Danteshwari Herbal Farms
Knowing the roots
As you walk around Raja Ram Tripathi's farms — there are 14 of them — you constantly feel you are being watched. A youth standing in a corner, pretending to be busy, while he watches your every movement, gives an eerie feeling. He exchanges greetings with Tripathi, who dismisses him as a farm labourer, but that does nothing to dispel your fear. After all, this is Bastar, the heart of the Naxal regime, where, if reports are to be believed, not even a leaf flutters without the knowledge of the red brigade.

It is here that Tripathi, who quit a cushy State Bank of India job in 1997 to move to agriculture, has built a successful business of farming and processing herbal plants. He says that though he has encountered Naxals — many of them pretending to be casual farm labourers who work in his field and check over his business — they have never troubled him.

The reason is simple: he has gained the confidence and trust of the locals, many of whose relatives are Naxals. "It needed a lot of patience to gain their trust that their culture, land and forests would not be exploited," he says. Tripathi claims he did not face any resistance when he acquired 1,040 acres of agricultural land for his company.

"Our land is in the non-tribal area and is used for herbal farming only," says Akhilesh Tripathi, head of legal affairs at Maa Danteshwari Herbal Farms, one of the three companies owned by Tripathi and named after the local deity in Dantewada.

Born to a school teacher from Uttar Pradesh — who was posted in Bastar in the 1960s — Tripathi understands the local culture and the origins of the social upheaval very well. "That gives me an advantage, but not immunity from the disturbance," says Tripathi who has adapted himself to the situation. Tripathi as well as his employees carry company-issued identity cards all the time. Often, they are stopped at night — sometimes by security forces and at others by the Naxals — and flashing the identification helps. Further, Tripathi has insured all his permanent staff. Since they are generally farm labourers, the premium for their policy is paid by Tripathi's company. He has also insured himself for Rs 1 crore, interestingly, naming his employees as the beneficiaries.

Referred to as the ‘Musli King of Chhattisgarh' by local media and politicians, Tripathi has not only taught tribals who are nomadic by nature to do farming but also to do commercial transactions with the buyers. His ability to domesticate wild medicinal plants has brought him closer to tribals, explains Selvam Daniel, managing director of Ecocert India, an inspection and certification body for organic, fair trade and good agricultural practices (GAP). "He even pays them Rs 2 more than others wanting to secure their labour for projects such as building roads," says Daniel. Whether or not this additional Rs 2 goes to the Naxal kitty is difficult to say, but it could well be a kind of fee to keep them at bay.

 Today, Tripathi has 1,000 permanent staff and 2,000 casual workers, consisting of marginal farmers, who work in his fields for an extra income and free seeds. These tribals not only earn daily wages but also harvest herbs such as Musli, on their own land, thanks to the free seeds and saplings that Tripathi hands over.

Doing Business In Naxal Land
While most people outside of Chhattisgarh feel that doing business in Bastar is full of pitfalls, Tripathi claims that there is a huge opportunity to do business in Bastar without opposition from the Naxals and tribals, provided the locals are assured that their land will not be taken away and can instead be used to provide them a steady source of income.

Tripathi's views echo that of chief minister Raman Singh who in an interview to BW last month, said that agriculture and the herbal business will be the big differentiators in the economic growth of the state.

Tripathi is confident that doing business in Bastar is not only possible but also lucrative, as long as the locals are on your side. "My business has not been affected, because unlike the CEOs and owners of big companies who sit in Mumbai or other big cities, I'm always available and stay in the region." Connecting with the locals helps. "It is tricky to know that some of your workers are Naxals or their informers, and still carry on with work as if nothing has happened. But my transparency and work are my biggest shields."
Local Advantage
Tripathi, whose factories employ nearly 80 per cent tribal workers and whose farms provide livelihood to more than 300 tribal families either directly or as casual workers, understands that for his business to be successful he not only needs local participation, but also professionalism. "Professionals are a must to enhance business growth," he says.

PLAYING SAFE: Raja Ram Tripathi, CEO of Maa Danteshwari Herbal Farms, employs mostly the local people of Dantewada and pays them more than others. He says understanding the local culture comes handy doing business in a such a sensitive area (BW pic by M. Rajendran)Tripathi regularly picks up local youth who have a senior secondary school education and sends them for training and graduation in agriculture to various universities across the country at his own cost. After completing their education, they return and train the uneducated farmers and tribals in the latest agriculture practices.

Tripathi's efforts are beginning to yield results. He is on the verge of signing an agreement worth a few crore rupees with Tata Steel. "We see agriculture and horticulture as a way to do something for the society," says Krishnanandan, spokesperson for Tata Steel's Jagdalpur project in Bastar.

The Tata Group is in discussion with the Central Herbal Agro Marketing Federation of India (CHAMF), of which Tripathi is the president, to procure herbs such as white musli and stevia and market it under a new brand of herbal products.

"Many multinational companies and India's big business houses are entering this business," says Tripathi. He cites the example of a US-based pharma major, which has approached him to set up a joint venture to source herbal products. "The company had seen one of our herbal fields through satellite and wikimapia and approached us," says Tripathi, though he doesn't reveal the name of the company.

A team from the pharma major has already visited his fields in various parts of Bastar. This company has secured the clearance to sell five new herbal products under a joint brand name. The first two of the three level approvals have been secured from the US Food and Drugs Administration.

SEED Infra Solutions
Connecting the dots
Early this year, employees of Delhi-based SEED Infra Solutions camped for 22 days outside the Chirya village in Jharkhand's West Singhbhum district. In order to implement the CSR activities of Steel Authority of India (SAIL), they first had to win the trust of the villagers. But they were perpetually being stonewalled. No talk of development cut any ice with the villagers. Finally, SEED employees framed the photographs of the villagers that they had clicked for their survey and returned it to them. "It was a small gesture. But in the whole process we met them four times and the ice was broken. They were happy, and started conveying their feelings to us," explains Anirban Roy, founder of SEED, which implements the CSR activities of corporates on a turnkey basis in troubled areas such as Dantewada, Bastar and Saranda Forests.

REACHING OUT: A dairy farm set up by SEED Infra Solutions at Chirya village in Jharkhand's West Singhbhum district. The farm has been set up to benefit the villagers, most of whom are tribals (BW pic by Bivash Banerjee)"We had problems in starting our programmes. People were not willing to hear us out, but we managed to convince one group and assured them that we would quit, if they felt things were done against their wishes and will," explains Roy.
Ideally implementing CSR activities should not meet much resistance, considering it is for the benefit of the villagers. However, that is not the case. Since most of the villagers have not seen the outside world, they do not understand the benefits of development. They view all outsiders with suspicion and winning over their trust is the key to Roy's success.

So Roy treads with utmost care. "Getting into the core of these villages is tough and requires patience, constant efforts and clarity of the mind," he says. "We don't tell them about our development plans; instead we take small steps and come closer to them."

Wherever SEED has been able to win the trust of the villagers, the CSR activities are bearing fruit. Chirya village, where electricity is yet to reach, is lit up thanks to SAIL's battery operated supply of power. "These activities also allow us to bring locals and tribals to the mainstream. Many of our literacy intervention programmes, dairies and vocational courses are being conducted by them," explains Roy.
His latest project requires him to undertake NMDC's CSR activities in Dantewada, Chhattisgarh — one of the biggest bastions of the red brigade. The area is known for its anti-industry stand, which has kept big industrial houses at bay. The Naxals blew up a school, which was set up by a company as a part of its CSR activity and the feud became so intense that the company pulled back all its CSR activities in the region.

Under these circumstances, SEED has been mandated to evolve five adaarsh grams (ideal villages), with proper health, adequate education, transportation facilities, etc. It is a tough challenge, which requires the employees to think on their feet. For instance, the villagers objected to having a concrete roof on the school building as they were afraid the building would be used by the security forces. So SEED used slanted tin sheets for the roof.

Similarly, the villagers objected to a road SEED was building because they suspected that security forces would use it reach to the villages. To assuage this fear, SEED built internal roads but did not connect it to the main road. "All this has helped us win the confidence of the villagers," says Squadron Leader (Retd) Pratap Bhanu Singh, one of the 40 employees of SEED.

Taking No Chance
SEED employees are posted in the heart of the Naxal belt, where encounters between security forces and Naxals have become a daily affair. In fact, the day the BW  team visited the area, an encounter took place killing at least three alleged Naxals in Jharkhand's Saranda forest.

Roy is well aware of the circumstances in which he requires his employees to work and has formed HR policies accordingly. For instance, each employee is posted in the field for only three months at a stretch, at the end of which he is given a two-week cooling-off period to spend time with his family. Moreover, even the life insurance cover provided to these employees has been doubled by SEED.

HR professionals at SEED also call up the families of SEED's employees with news of their well being. This unusual HR practice has been adopted by the company since most of its employees are posted in far-flung areas with no modes of communication.

SEEDING BENEFITS: Anirban Roy, founder of SEED Infra Solutions, says that gaining confidence of the villagers is tough. He says he doesn't tell them about the development plans; instead takes small steps to get closer to them(BW pic by Bivash Banerjee)However, once in the field it is the resourcefulness of the employees that helps them work in these areas. Everything from the way they dress to the conversations they strike is aimed at winning over the confidence of the villagers and keeping the Naxals at bay. "We do not want to give them the impression that we are aliens. We want them to know that we are one of them and understand their problems," says Radha Krishan Nagda, who supervises CSR activities in Silphore and Parwatpur villages of Bokaro. Nagda dresses in cotton shirts and pants like the villagers and sits on the floor with them.

Maintaining a low profile and keeping out of the limelight is also very important. Bhanu, who takes care of CSR programmes in 50 Naxal-dominant areas, says that before posting anyone in these areas, there is a thorough HR briefing, where it is made clear to all employees that they are not working in normal circumstances and, hence, should be extra cautious.

Implementing CSR activities and gaining the confidence of the villagers is the easy part of Anirban's job. The more difficult part is convincing them to relocate, whenever SAIL intensifies its mining activity in the area. Though Roy is confident he will manage this uphill task, by no means is it going to be easy. SEED's attempts to uproot even a single tribal will bring it in direct confrontation with the Naxals active in that area. "We stay equidistant from both Naxals and security agencies,"says Roy. "We have a set mandate and we only try to focus on that. But for sure, it is easier said than done."