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Datawind: Things to learn from Aakash fiasco!

Now the much hyped world’s cheapest tablet ‘Aakash’ project is delayed, it’s high time to think about what policymarkers in India are trying to achieve after interfering into quality projects in India. It might be first of its kind experience for Datawind, the winning bidder of Aakash tablet project, to mess up even after initial head-on start. Here are some inputs to Datawind to handle the mess now:

  • Never go to public before you start delivering– Aakash project, launched last year has gone multiple ups-downs in past six months. Perhaps, the companies involved into the project bidding & then winning bid have underestimated the government’s role in de-railing the entire project, if it doesn’t meet unspecified criteria mentioned no-where. In such high tech government tender contracts, risk assessment has to take into account the policy flip-flops with high contingency funding at disposal.
  • Never read too much into Government Tender Documents– As far the writer’s experience goes, reading between the lines of tender documents is must even before you think of bidding for government tenders. It’s true for all DoT/IT  related tender projects. There’re purposefully loopholes kept in tender documents to exploits flaws later on. Always take notice of hidden costs & implications of same on project progress. Don’t read too much into tender, but learn to read between lines. The issue started after IIT Rajasthan & Datawind couldn’t agree upon exact specifications of the final product which resulted into rejection of initial lot (Was it specs issue or quality issue?)
  • Deliver or Fail: As far as initial booking for Aakash project was concerned, which went beyond 1 million tablet count, Datawind had underestimated the booking order book. As per the initial plan, Datawind alone couldn’t deliver the order book, so it has to outsource the order manufacturing to multiple companies. And here it made a gamble. The company couldn’t match up its arsenal to order book demands & deemed to fail.
  • Keep close eye on cash flow: As far as latest issues are concerned, Datawind could only deliver 366 tablets till date in Oct 5. In fact, as per the news report, IIT Rajasthan, which owns the right of Aakash design, had rejected more than 6000 tablets delivered to it by Datawind in earlier lot, sighting defects in final product. Apparently, it seems that due to disputes over final product specifications, Datawind mightn’t be in position to get money for those rejected tablets (Rs 2500 x 6500 Tablets = Rs 1.75 Cr approx) and had to close the production due to lack of funds. Now as Datawind has outsourced the production & assembly of tablets (Quad Electronics), it owes money to its suppliers, which has now entered into legal domain.
  • No Verbal commitments please: Don’t trust your government counterpart for any verbal or non-serious commitments. In India, government officials involved into tendering process have perfected the art of setting silly traps to catch bidders unaware. Don’t even bid for projects, if you aren’t sure of final delivery of product at start. Consensus over tender document nitty-gitties is must. Ask, question & make sure all issues are resolved. Get written orders before you start building.
  • Money please: In government high tech tender contracts, raising invoices successfully is tedious work. Deliver prototypes of product/services in small numbers & try to raise invoices for those successful deliveries immediately. Don’t go for mass production or delivery in one-shot. Deliver small, raise invoice, get cash & build next slot. Successful invoicing for your delivery of products & services is must, but that’s not end- getting cash quickly is more important for successful delivery of entire project.

If the issue gets resolved by making compromises then it must make sense  for bidder to stay on. Many times it does happen that after initial hiccups the project starts delivering on schedule thereafter. So if it makes sense to stay on for future prospects, then Datawind must stick to the course. But as mentioned above, bidders can’t go endlessly without firm assurance from their government counterparts.

Datawind has only two choices here. It either must stick to battle to recover the investments made in manufacturing initial set of tablets for testing (According to Telecomblogs, it amounts to Rs 1.75 Cr for 6500 tablets with Rs 2500 cost of producing single tablet). Or it might decide to quit the project entirely paying the penalty (as per the exit clause in tender for non-performance) along with losing image & initial investments(sunk cost?) too.  The workable solution has to come out keeping in mind that Datawind might risk the losing the entire order book, if it fails to deliver on promises.

Tags : Aakash 2.0Aakash TabletDataWindIIT RajsthanQuad ElectronicsUbislate