By Avanish Tiwary
"What's the weather like?" is a question as innocuous as any other in our daily conversations. It's also a question that we should be thankful about-it fills in those minutes when we really don't have much to say in a conversation. But is it a saleable commodity? Jatin Singh, 35, who runs India's first private weather forecasting company, Skymet, definitely thinks so.
Clear skies
Singh says that his curiosity to know more about the weather got into him when he was just 17, at the time his father was a vendor of computer equipment to the Indian Meteorological Department (IMD).
The fascination with the weather continued through his college years and stayed on when he forayed into journalism, as he worked with Aaj Tak, Sahara Samay and other media houses.
The idea of starting a weather forecasting company took form when one of Singh's producers at Aaj Tak told him about the difficulty in procuring accurate weather information. "At that time, somebody had to go to the IMD office to get the cyclostyled sheet {a weather chart which shows maximum and minimum temperature}. This was not really consumer-friendly," says Singh, Founder, Skymet.
Seeing the cumbersome process involved in getting information about the weather, which was invariably unreliable, Singh launched Skymet in 2003 with the intention of providing reliable and accessible weather forecasts. However, in the early days, as there was no other body except the IMD to get the information from, Skymet ironically sourced its information from whatever was publicly available on the IMD's website-the same body it hoped to pitch itself against. "Initially what we were doing was getting data, making graphics. We weren't really generating forecasts," Singh says.
For a year or so, Skymet was making graphs indicating rainfall, wind and other weather features, which made reading the data easier, especially for media houses. Singh says when he started, he just knew how to pitch the idea to television channels. Singh got his first contract from Sahara Samay soon after he started the company. "We were very lucky that no one else was around then. We got a very lucrative deal with Sahara Samay, which was much more than our input costs," Singh reveals. It took one whole year before Skymet could actually start forecasting weather information. In 2004, the company invested in technology and brought in new people. "We started out by hiring ex-Air Force personnel who understood the weather. They did the quality check and verifications of the data and made the whole system better. Then we got into computing, generating weather forecasts through models and picked up the most enhanced model to forecast weather," Singh says.
Grey clouds
Forecasting weather requires a lot of complex computing which is dependent on sophisticated software and is very expensive, Singh informs.
A network of sensors in towns and villages helps Skymet in predicting location-specific weather. These sensors send data to a centrally located computer in Noida, where weather data from around the world is clubbed and crunched together. After the weather forecast is cross-checked and packaged, it is sent to different clients, including farmers.
Singh says that he self-funded the company with a seed amount of Rs. 1 lakh. "It's a capital intensive business and we were working on a shoestring budget. We could not get the best and the brightest," he concedes.
Mark Kahn, Venture Partner at Omnivore Capital, which has invested in Skymet, lauds Singh's ability of running the company by bootstrapping it for eight years. Though, he says, that did restrict its growth. "In eight years, the business had not scaled up as it should have. It was also because there were no investors backing them," Kahn says.
Omnivore Capital, a Godrej Group-backed venture fund that invests in agriculture businesses, put in an undisclosed amount in Skymet and acquired a 33 percent stake in August 2011. Omnivore's investment in Skymet, which was the latter's first funding, was used for a number of thingsâ€"to hire more people, for R&D, and to buy and install weather sensors in different parts of India to get more accurate data.
According to Kahn, before the investment, Skymet was earning yearly revenues of Rs. 2 crore. "They had no professional IT head. There was a lot of hiring after we invested. Funds were also used for setting up monitoring equipment," he says. Skymet now has its own sensors at 800 points in different states including Bihar, Maharashtra, Andhra Pradesh and Uttar Pradesh.
Power trip
By 2006, Skymet had a number of clients in the media industry, such as Zee News, Aaj Tak, Sahara Samay, Mint, Times Now, ABP, The Hindu, etc. "The early 2000s," Singh says, "was the time when there was a lot of money in the media industry as networks expanded and new channels came in."
But even though the media industry was booming and Singh was adding new clients, his entrepreneurial instinct led him to foray into other verticals too. "Getting into other segments was a risk-reducing call. When you get into one vertical, you should also get into another, so if one doesn't pay in the long run, the other will," he says.
In 2006, Singh discovered how important weather information is for the power sector and started working on the segment. He says the weather massively affects the availability and usage of power in cities, as well as in the villages. "If it doesn't rain on time, the farmers quickly move to diesel pumps for irrigation purposes. The demand for power in villages shoots up at that time," Singh explains. In cities, the demand for power is greater during the long extended summers, which is when there is an increase in the consumption of air conditioners and other electrical equipment.
According to Singh, power companies can lose more than a lakh a day, if they don't get the right weather information on time. "If the temperature falls and they don't have prior information about it, they [power companies] would be sitting on a lot of power which has no demand and would subsequently bleed money." Singh recognized this early and made a move to tap into it.
Soon, he got contracts from Tata Power and Reliance Energy for providing weather forecasts at short intervals-data related to temperature, rainfall, humidity, wind speed and wind direction every 15 minutes. Information management in the energy sector is a Rs. 25 crore-Rs. 30 crore market, of which Skymet has grabbed 10 percent, claims Singh.
In 2008, Skymet entered a new vertical: Agriculture. Singh says getting a short-term contract from Nokia Life Tools was a turning point for the company. The weather forecast is used by farmers on their Nokia handsets, which have a built-in app for weather information.
Apart from providing forecasts on temperature, rainfall, humidity, etc., Skymet also started providing agri-advisory and crop statistics, which got them clients such as ICICI Bank, HDFC Ergo, etc. Skymet could now provide customized weather forecasts, both short-range (up to three days) and medium-range (up to seven days).
"A lot of agri-insurance settlements are done through us. Farmers get their insurance settlements on bad weather through our services very quickly, because the data is live, and there is no time delay between us getting the data and transferring it to the insurance company," says Singh. However, Singh is still betting big on the power sector which he says rakes in the maximum revenue for his company, followed by agriculture and the sector he knows well-media.
Other Posts
Auto components sector in high gear
Industree-ous
West Side Story
Central Parking Systems has paved way for organized parking
Changing the directors in an organization
You can send your feedback on smementor@moneycontrol.com or simply post comments below
