Business Proposal for Solar Energy Solution Business Plan Report

Business Proposal

CRESL (Pay as you go model)

Interim Report

Contents Executive summary................ summary............................ ......................... ......................... ........................ ........................ ........................ ......................... ......................... ............................. ................. 3 The Market................. Market............................. ........................ ........................ ......................... ......................... ........................ ........................ ........................ ........................ ........................... ............... 3 The Products................ Products............................. ......................... ........................ ........................ ........................ ......................... ......................... ........................ .................................... ........................ 3 Management............. Management......................... ......................... ......................... ........................ ........................ ........................ ......................... ......................... ....................................... ........................... 3 Obectives........... Obectives....................... ......................... ......................... ........................ ........................ ........................ ......................... ......................... ............................................. ................................. ! Mission............... Mission............................ ......................... ........................ ........................ ........................ ........................ ......................... ......................... ........................ .................................. ...................... ! "eys to Success................. Success............................. ........................ ........................ ........................ ......................... ......................... ........................ ........................ ........................ .................... ........ ! #usiness conce$t.................. conce$t............................... ......................... ........................ ........................ ........................ ......................... ....................................................... .......................................... ! %hy is so&ar energy more im$ortant in 'ndia(................................ 'ndia(............................................ ......................... ......................... ............................... ................... ! Product and services.............. services.......................... ........................ ......................... ......................... ........................ ........................ ........................ ......................................... ............................. ) So&ar $o*er so&utions................ so&utions............................. ......................... ........................ ........................ ........................ ......................... ......................... ................................... ....................... ) Products................. Products............................. ........................ ........................ ........................ ......................... ......................... ........................ ........................ ........................ ............................... ................... + Start,u$ Summary........... Summary....................... ......................... ......................... ........................ ........................ ........................ ......................... ......................... ................................. ..................... + Market............... Market............................ ......................... ........................ ........................ ........................ ......................... ......................... ........................ ........................ ........................ ....................... ........... + Marketing P&an.................. P&an.............................. ......................... ......................... ........................ ........................ ........................ ......................... .......................................... ................................ ... - Product /........................ /.................................... ........................ ........................ ......................... ......................... ........................ ........................ ........................ ......................... ...................... ......... - Price /...................... /................................... ......................... ........................ ........................ ........................ ......................... ......................... ........................ ........................ ........................... ............... - P&ace /...................... /.................................. ........................ ......................... ......................... ........................ ........................ ........................ ......................... ....................................... .......................... - Promotion /...................... /.................................. ........................ ......................... ......................... ........................ ........................ ........................ ......................... ......................... ................... ....... - Marketing P&an Process............... Process........................... ......................... ......................... ........................ ........................ ........................ ............................................ ................................ -0uman resources............. resources......................... ........................ ......................... ......................... ........................ ........................ ........................ .............................................. .................................. -1 Team..................... eam................................. ........................ ........................ ........................ ......................... ......................... ........................ ........................ .......................................... .............................. -1 Organi2ationa& Organi2ationa& Structure............... Structure........................... ........................ ........................ ......................... ......................... ........................ ....................................... ........................... -1 Pay Structure................ Structure............................ ........................ ........................ ........................ ......................... ......................... ........................ ........................................... ............................... -1 Other #enets............... #enets............................ ......................... ........................ ........................ ........................ ......................... ......................... ........................ .............................. .................. -3 Time Period 4or Payment................ Payment............................ ........................ ......................... ......................... ........................ ........................ ........................ .......................... .............. -3 Permissib&e Permissib&e deductions.................. deductions.............................. ........................ ........................ ........................ ......................... ................................................... ...................................... -3 R'S" CO5ERE6 786ER SOC'9L SEC7R'T: L9%S '8 '86'9.............................. '86'9................................................................. ...................................-! -! ;inancia& P&an < 9na&ysis/............. 9na&ysis/......................... ......................... ......................... ........................ ........................ ........................ ......................... .................................. ..................... -= Revenue Proections.............. Proections.......................... ......................... ......................... ........................ ........................ ........................ ......................... ......................... ......................... ............. -= #reak Even 9na&ysis............... 9na&ysis........................... ........................ ......................... ......................... ........................ ........................ ........................ ..................................... ......................... -> /#usiness P&an Proect ?#PP@ 1-3,-!.

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Strategy Overvie*................................................................................................................................... -+ 5ision................................................................................................................................................... -+ Com$etitor 9na&ysis............................................................................................................................. -+ Strategy............................................................................................................................................... 1 Risk 9na&ysis........................................................................................................................................... 11 Market Risk A Com$etitive Risk..........................................................................................................11 Techno&ogy Risk................................................................................................................................ 11 Execution Risk...................................................................................................................................11 Ca$ita&i2ation Risk............................................................................................................................. 13

/#usiness P&an Proect ?#PP@ 1-3,-!.

Page 1

Executive summary

CRESL is a start-up company registered in Kerala as a private limited company, offering solar power solutions.

The Market

The ndian solar energy sector has !een growing rapidly, in the past few years, ma"orly due to #overnment$s initiatives such as ta% e%emptions and su!sidies. &ue to technical potential of ',((( trillion )*h per year and minimum operating cost, Solar +ower is considered the !est suited energy source for ndia. Today the Solar power, has an installed capacity of . /* which is a!out less than (.0 per cent of the total installed renewa!le energy of ndia$s1 currently total installed renewa!le energy stands at 02,33.0 /* as per /4RE. ndia5s power sector has a total installed capacity of appro%imately 0,6,7'2 /egawatt 8/*9 of which ': is coal-!ased, 3': hydro, : is renewa!le$s and the !alance is the gas and nuclear-!ased. +ower shortages are estimated at a!out 00: of total energy and 0': of pea) capacity re;uirements which is li)ely to increase in the coming years. The Products

CRESL, will supply, install and operate and maintain solar power systems . The company is offering +ay as you go model8 charges per
CRESL is owned !y few young professionals with rich e%perience in =perations, >an)ing, Engineering and mar)eting field


Page 3

Objectives •

To !ecome the mar)et leader of solar power solutions

•

To ;uic)ly gain mar)et penetration within the first three years.

•

To develop a customer-centric organi?ation !ased on cutting edge technology.

Mission

CRESLs mission is to !ecome mar)et leader of solar power solutions offering the highest ;uality products and customer service while saving customers money and ma)ing positive contri!utions to our environment. Keys to uccess

CRESL has identified three )eys to success that help the company grow into a mature mar)et leader@ •

+roviding cutting edge, relia!le, and simple-to-install and maintain solar power systems.

•

>roadening the mar)et of solar power into a mainstream energy source.

•

&esigning and implementing strict financial controls

!usiness concept

ndia is density populated and rich in solar energy. Solar energy is more important in ndia !ecause most of the days 82((-22( days per year9 in ndia is Sunny. =n only land area, The solar power reception is '((( per watt-hours per year 8*hAyr9. The daily average solar energy incident over ndia varies from  to 7 )*hAm3 with a!out 0'((B3((( sunshine hours per year 8depending upon location9, which is far more than current total energy consumption. ndia has a great potential to generate electricity from solar energy and the Country is on course to emerge as a solar energy hu!. The techno-commercial potential of photo-voltaic in ndia is enormous. Solar Energy is attractive !ecause it is a!undant and offers a solution to fossil fuel emissions and glo!al climate change. "hy is so#ar energy more important in India$

The fossil fuels li)e coal, oil and natural gas cannot remain the dominant sources of energy forever. /#usiness P&an Proect ?#PP@ 1-3,-!.

Page !

*hatever the precise timeta!le for their depletion, oil and gas supplies will not )eep up with growing energy demands. Coal is availa!le in a!undance, !ut its use e%acer!ates air and water pollution pro!lems, and coal contri!utes even more su!stantially than the other fossil fuels to the !uild-up of car!on dio%ide in the atmosphere. or a long-term, sustaina!le energy source, solar power offers an attractive alternative energy in ndia. t is environmentally clean, and its energy is transmitted from the sun to the Earth free of charge and there is no out come any to%ic gases.


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Kera#a

:

Kerala is a state which constitutes Sunny shoreline, caressed !y perpetual !luish waves that adorn the endless !eaches, with awe come green groves of coconuts that paint a shying !orderline of natural harmony. Kerala is a place of high lightning incidence when compared to most of the other parts in ndia !ecause of its weather patterns and the location of the *estern #hats. Digher population density and vegetation density result in more casualties. Lac) of awareness also aggravates the situation. The average temperature in Kerala is 37.( C 80 9. The temperature in Kerala normally ranges from 3 to 23 C 83 to ( 9 on the plains !ut drops to a!out 3( C 86 9 in the highlands. Temperature during *inter in Kerala is ma%imum of 3C and minimum of 0C. Fvg Summer starts in e!ruary and continues till /ay, the temperature during Summer in Kerala is ma%imum of 26C and minimum @ 23C. The Fverage temperature during summer and winter in Kerala is a!solutely fits to use Solar Energy.


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Product and services o#ar po%er so#utions

*e are targeting medium si?ed solar power installations 80(K* B 0(( K*9 for, Shops and Esta!lishments, Corporate offices, >an)s, Shopping mall where the day time use is high. Duge initial cost of installation and dou!ts with R= is a ma"or road!loc) in installing solar power. >ut the rising cost of commercial electricity and the higher rate of electric usage a!out 0((( an)s.


Page )

Products

CRESL offers supply, install, operate and maintain solar power solution to Shops and Esta!lishments, Corporate offices, >an)s, Shopping mall with a power re;uirement of 0( to 0(()w and the cost will !e charged against the actual usage. The rate will !e at par with the #R& power. n future the company is planning to start manufacture +G panels in its own facility so the cost can further !e reduced tart&up ummary'

CRESL is planning to rent out a office premises in the outs)irt of cochin city. This office will function as the main office for all mar)eting, operational activities. The office will !e set up necessary infrastructure, Testing and /aintenance facilities and e;uipment. Market

Consumers 8especially younger generation customers9 do show a preference for energy produced from renewa!le energy sources !ut invaria!ly fail to purchase renewa!le energy in si?ea!le num!ers. nitial research done over the last 0 month helped us to identify the !arriers to solar purchases, address consumer concerns, and loo) at ways to provide solar power plant solutions with guidelines that should !e integrated into their overall mar)eting approach.


Page +

>ased on initial discussions, there are four primary !arriers to solar power plant adoption, and it is mandatory that all these )ey !arriers are addressed to increase adoption and accelerate the implementation in the Kerala mar)et. Cost. Consumers are worried on the huge up-front costs and lengthy pay!ac) periods which are

deterring them from installing solar power plant at their apartmentsAoffices. Re&iabi&ity. Concerns a!out its performances and capa!ilities on the relia!ility of solar panel

technologies. There is also some perception in the corporate industry that solar might not power the total energy needs of the !uildingAoffice. Com$&exity. The time consuming and comple% nature of purchasing and installing solar energy systems

discourages potential customers. 'nertia. The financial comple%ity and the perception that it is a long decision-ma)ing process to setup a

solar power plant results in some consumer inertia. Though the consumers do understand the environmental !enefits, these are not persuasive enough to increase or accelerate adoption of solar power plants in commercial !uildingsAofficesAapartments. Therefore, the mar)eting program should create a connection with consumers through mar)eting messages that would enhance interest and lead to further in;uiry. /ar)eting messages that are a!le to connect on a financial or value level are the ones which would succeed. Some of the steps to !e ta)en to help identify the mar)etAsegment which needs to !e focused are@ /ar)et Segmentation !y 2 categories@ • • •

#eographic &emographic +sychographic

>y understanding the needs of segment we can tailor the mar)eting mi% to deliver what the consumer values. Each segment will offer growth and profit opportunities, so the tric) is to deliver the !est offer to the !est segment8apartment comple%es, commercial !uildings, offices, etc.9. The goal of the mar)et research would !e to help identify the following@ - +roductsAServices and the consumer fit - Consumer +rofiles - Consumer Characteristics - Consumer needs and wants


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Marketing P#an

The classic elements of mar)eting B the  +$s@ +roduct, +rice, +lace, +romotion B offer a useful matri% to assess the solar power plant program. Solar program initiatives should address each of the  +$s. Product ( *e can evaluate the +roduct from the perspective of consumers$ rational and emotional attitudes towards solar technology. These attitudes do play a large role in the purchase cycle. Consumer reaction to solar technology 8e.g., price, relia!ility, ;uality issues9 helps identify the opportunities and the !arriers. Price ( This is one of the !iggest !arriers for solar power plant adoption in the mar)etplace. The government is helping to some e%tent in financing of such plants, and helps overcome the consumer price concerns. Currently, financing options are increasing the access to solar power and ena!ling it to new groups of consumers. P#ace ( +lace through which the solar is sold, also is an area where solar programs have an important role through their wor) with installers, developers, and suppliers. >uilding a strong serviceAsupplier networ) is critical in )eeping up with rising demandH ensuring that consumers can easily find an engineerAinstaller to setupAfi% the solar plant within the shortest duration. Promotion ( This should !e a primary focus so that it can increase the visi!ility of solar installations and !roaden the appeal. ased on these studies, the remainder of this report will 09 identify ma"or mar)et !arriers, 39 detail smart mar)eting strategies to address each !arrier, and 29 recommend action steps to implement a successful mar)eting plan.


Page -

Marketing P#an Process Customer Research

Barriers & Opportuniti es


Marketing Goals

Page --

Marketing Programs/T actics (4Ps)

e!elop Bu"get

Monitor an" #!aluate $ales/Resul ts

)uman resources Team • • • •

The management would comprise 3 /anagers- /ar)eting /anager and an Electric Supervisor. There is one Fssistant mar)eting /anager, and one accountant. There are two highly s)illed electricians. nitially =ffice will !e in Cochin !e in Cochin.

Organi*ationa# tructure

Managing irector

#%#CTRC $'P#R$ OR MR+#T* G M*G#R

#%#CTRC * #%#CTRC * ,#% M*G#R

Pay tructure •

/anaging &irector-Rs.((((A- per month I profit share /ar)eting /anager-Rs.3((((A- 8=ther !enefits !y way of performance lin)ed !enefits to the e%tent

•

of Rs.0(((A- per )ilo watt sold over and a!ove the monthly target.9 The Fssistant /anager 8/ar)eting9 will !e paid a monthly salary of Rs.03(((A- 8=ther !enefits !y

•

way of performance lin)ed !enefits to the e%tent of Rs.0(((A- per )ilo watt sold over and a!ove the monthly target.9


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•

•

The electricians will !e paid Rs.0((((A- consolidated 8=vertime for a ma%imum of ( hours per month allowed9 . Fccountant will !e paid a salary of Rs.(((A-. Other !ene+ts

• • •

C=4
Time Period ,or Payment •

#e4ore ex$iry o4 )th day a4ter the &ast day o4 *age $eriod

•

'ncase o4 termination o4 em$&oyment ?inc&uding C&osure@

•

•

be4ore the ex$iry o4 the second *orking day 4rom the day on *hich em$&oyment is terminated. Mode o4 Payment o

%i&& be $aid by cheue or by crediting the *age in the bank account .

Permissib#e deductions •

•

•

6eductions 4or absence 4rom duty 6eduction 4or damage to or &oss o4 goods ex$ress&y entrusted to the $erson 4or custody Recovery o4 &oans made 4rom any 4und


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RIK CO-ERE. /0.ER OCI12 EC/RIT3 21" I0 I0.I1? D9&& covers to be a$$&icab&e on&y a4ter one year@


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4inancia# P#an 5 1na#ysis( Revenue Projections

CRESL Revenue Projections Years 1 to 5 (Rs) Year 1 Year 2 Year 3 Product A Number of Units Price per unit Tota !"s#$ %er&ice ' Number of (ustomers )ee per (ustomer Tota !"s#$

Net Revenue

Year 4

Year 5

1,12,500 9 10,12,500

3,37,500 9 30,37,500

5,62,500 9 50,62,500

7,87,500 9 70,87,500

10,12,500 9 91,12,500

50 0 0

50 5,000 2,50,000

100 5,000 5,00,000

150 5,000 7,50,000

200 5,000 10,00,000

10,12,500

32,87,500

55,62,500

78,37,500


Page -=

1,01,12,500

Monts *ont+ 1 *ont+ 2 *ont+ 3 Tota 1st -uarter *ont+  *ont+ 5 *ont+ 6 Tota 2nd -uarter *ont+ 7 *ont+ 8 *ont+ 9 Tota 3rd -uarter *ont+ 10 *ont+ 11 *ont+ 12 Tota t+ -uarter Tota for .ear 1ssumptions taken(

Year 1 0 0 0 0 0 0 0 0 1,01,250 1,51,875 2,02,500 ,55,625 1,51,875 1,82,250 2,22,750 5,56,875 10,12,50 0

Revenue s by Monts ! "uarters (Rs) Year 2

Year 3

Year 4

Year 5

1,6,375 1,6,375 2,30,125 5,58,875 1,97,250 2,30,125 2,30,125 6,57,500 2,63,000 3,28,750 3,28,750 9,20,500 3,61,625 3,9,500 3,9,500 11,50,625

2,78,125 2,78,125 3,89,375 9,5,625 3,33,750 3,89,375 3,89,375 11,12,500 ,5,000 5,56,250 5,56,250 15,57,500 6,11,875 6,67,500 6,67,500 19,6,875

3,91,875 3,91,875 5,8,625 13,32,375 ,70,250 5,8,625 5,8,625 15,67,500 6,27,000 7,83,750 7,83,750 21,9,500 8,62,125 9,0,500 9,0,500 27,3,125

32,87,500

55,62,500

78,37,500

5,05,625 5,05,625 7,07,875 17,19,125 6,06,750 7,07,875 7,07,875 20,22,500 8,09,000 10,11,250 10,11,250 28,31,500 11,12,375 12,13,500 12,13,500 35,39,375 1,01,12,50 0

1= sho$sAcom$&ex - com$&ex starting 4rom Month >A:ear 9nother 1= sho$sAcom$&ex starting 4rom Month BA:ear ;rom :ear 1 on*ards minimum o4 1 com$&exes added to customer base

-M% F )cr .>M% F =cr .- M% F >+L .= M% F !=L 1 sho$sAcom$&ex F sma&& sho$s F .1= M% F -"59 A sho$ A day A connected &oad

1=

$er site F 1="%9 cost G 1L ?max 11L@ #E coming around 1.= years ?*ith :ear - o4 customers@ Maint 4ee F '8R =AcustomerAyear


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"%h

!reak Even 1na#ysis Rs

= Rs )=

>>>.>>>>>>) .= 333.3333333 - 1= - B Rs B

- Crore 'nvestment 4rom ;ounders H ! Crore #ank Loan

'nitia& 'nvestment Per "%$ investment in eui$ment Possib&e "%$ *ith = Crore investment EIciency 8et Ca$acity 8umber o4 7sage 0rsA6ay 8umber o4 %orking 6ays a Month "%0r A :ear Rate A 7nit Tota& Cash inJo* $er year i4 a&& units so&d

Se&&ing Price

B

5ariab&e cost

9ssumes neg&igib&e variab&e  cost

Tota& ;ixed cost

Rs =

Tota& ;ixed cost a4ter ca$ita& subsidy K 3

Rs 3=

!reak even sa#es units 6 Ty$ica& units consumed by a ma&& $er month Ty$ica& units consumed by a ma&& $er year

$er unit

7888888'889

-1

-!!

8umber o4 ma&&s that can be serviced

"%0r $er year

)

0umber o, years to break even 6


"%0r $er month

:

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9ssuming a&& units are so&d in rst year itse&4. D 9&& amount in RS


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trategy Overvie% -ision

=ur vision is to !e a!le to place a CRESL !randed power plant powering every commercial esta!lishment in ndia and through that !ecome the largest commercial solar power supplier in ndia. *e will do everything in our capacity to ensure relia!le and sta!le power supply and e%cellent customer service and support for our customers. *e envision providing ma%imum return on investment to the shareholder !y increasing profita!ility through adopting new technology and practices to minimise cost and ma%imise output. The following will remain as our core values: • • •

•

Digh ;uality customer service to achieve customer delight Continuous improvements in service ;uality , value to the customer and share holder wealth Constant search for the most efficient and cost effective technology alternatives to deliver value to !oth customers and share holders Strengthen the !ondage !etween company and its employees so that each can contri!ute to the well !eing of the other and "ointly strive to achieve company goals and values

Competitor 1na#ysis


Page -B

;actor

Pr oduct s

Pr i c e

So&ar Energy

Strength

"ene/abe %tabe and ner. product reiabe

i+ 4nitia (ost, o/er &ariabe cost, ife 25 rs

%eakness rid E&ectricity 6iese& enset

(ustomer Pro&en o&er time, (ost o&erruns due to 2 /orries about but acs reiabiit.# fue price +ies, +i+er reiabiit., cost (ost can increase maintenance impications etc due to scarcit., &otae fuctuations

on term cas+ ue initia fo/s in&estment

Pa. per /att and 'i initia in&estment,  o&ernment ife appro# 10 e, inter&ention on price i+ &ariabe cost

ood :uait. 25 rs 'ad imae due "easonabe :uait. products /arrantee to earier /it+ &otae Qu al i t y a&aiabe and is a&aiabe modes bein fuctuations and used for ma;or epensi&e and occasiona faiures instaations# o/ ife (onstant po/er A /ide &ariet. oba net/or o&t support No (+oice# as to a&aiabe of supp. ma. not be o /it+ oca S e l e c t i o n t+ere on term pro&ider

;actor

S e r v i c e

'm$ortance to

(onstant po/er output

5

3

So&ar Energy

Strength

%eakness rid E&ectricity 6iese& enset

(ustomised ser&ice due to competition

ood ser&ice net/or

"eati&e. ne/ *ediocre tec+noo.

i+ reiabiit.

(onstant and troube free supp.

=ependent on sun and +ence coud. da.s, output is o/

*oderate /it+ i+ "eiabiit. fre:uent fuctuation in &otae and supp.



i+ %tabiit.

%tabe po/er

None

*oderate. %tabe

i+ %tabiit.



i+

1

*an. reputed companies in pace

3

Re l i abi l i t y

'm$ortance to

ood ser&ice net/or 

St abi l i t y pertise re:uired is o/ Ex pe r t i s e as tec+noo. is pro&en Ne/

Compa ny

L o c a t i o n

S a l e s Me t hod

Cr e di t Pol i c i e s

Not a factor as /e pro&ide onsite ser&ice =irect *aretin

ue data None i+ base a&aiabe from suppiers and on internet N>A "eati&e. ne/ o&t# bacin tec+noo. and pro&ides suppiers ne/ compan. credibiit. )eibe A&aiabiit. of options to suit roof top space customer need and sun (an epain
Pa. as .ou o No ris for option /it+ pa. customer after use

Not a probem in most cases

Not a probem in most 2 cases

stabis+ed pa.er and no maretin needed due to monopo.

*aretin t+rou+ a 1 c+annes

(redit Pa. as .ou o coection ma. options


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?utri+t purc+ase of 3 t+e enset and o/n it


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trategy

To !e consistent with our Gision statement, we will !e fine tuning our strategy to deliver highest return on investment to our customers and shareholders. Solar energy is a sunrise industry and hence we choose this one, where you have a long hori?on of profita!le period, and can achieve a!ove average return on e;uity. There are good amount of government support, which will reduce the cost 8various ta% !rea)s in imports and a 2(: capital investment su!sidy on installations !elow 0(( K*p capacities9. The life of a solar panel is in e%cess of 3' years 8/anufacturers give a guarantee of 3' years with at least (: efficiency9. The photo voltaic process does not re;uire much maintenance and hence the varia!le e%pense is minimal. Fs per the latest estimates, commercial solar installations with no su!sidy can !rea) even in less than '- years, even when you are giving electricity under Rs A usinesses etc9, the adoption is very less, mainly due to the huge capital investment re;uired for Solar and the scepticism a!out the R= of such investments. Ft the same time, the cost of electricity for this sector is in e%cess of Rs .' per unit, which can go as high as Rs 06A

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*e will ta)e a small 8around 0(: of the cost9 amount as a security deposit from the customers, which will !e returned towards the end of the contract term 8minimum ' years9. The rate chargea!le will !e less than the starting range of the commercial electricity. Flso, we will !e a!le to run all load from  Fm to (6@(( +/ directly from the device and another 3-2 hours from the stored power from !attery. This will allow us to service 0(-03 hours of their pea) load from Solar, which will ena!le us to utili?e the full capacity of the power plant. This will !enefit the customer !y driving down their costs and getting relia!le and fluctuation free electricity. Flso, this will ma%imise shareholder R= !y efficiently utili?ing the installed capacity to the ma%imum and thus high R=. nitially, all the components will !e purchased from reputed suppliers. The installation will !e outsourced to minimi?e varia!le cost. The installed system will !e inspected !y the staff supervisor and will !e commissioned. =nce the annual installations go !eyond (.' /*p, we will !egin assem!ling and lamination of the solar panel assem!ly and inverters. This will ena!le us to drive down the capital costs, and also will ena!le us to service faulty solar panels and inverters in house to ma%imise usea!le life. =ur initial targeted mar)ets will !e /a"or cities in Kerala where such large esta!lishments are located. *e will e%pand to rest of South ndia in another -' years. *e will e%pand to rest of ndia within 3-2 years from then. n Kerala, our initial operations will !e !y outsourcing most of the wor) e%cept maintenance, mar)eting and !oo) )eepingAaccounting. This will ena!le us to )eep the varia!le costs to !e in line with our sales. =nce the sales are consistently increasing, we will start the production of components etc. or entering other mar)ets, we will use a partnership approach, where the ;uality will !e ensured !y us !y constant monitoring, while many of the functions will !e done !y local partners, so as to use their )nowledge of the locality and connections. Li)e /aruti Su?u)i, we will stipulate the maintenance process and customer complaints will !e ta)en up seriously. uality will not !e compromised and customer complaints can lead to severe steps, including dropping the partnership. The contracts will have provisions for this and penalty clauses.


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Risk 1na#ysis Market Risk ; Competitive Risk

Fs of now, the pay per use for smallAmedium commercial esta!lishment is minimal or nil. So we will not face much issue here. >ut once our model proves to !e successful, there will !e intense competition as most of those who are in the sales mar)et can come up to this segment. Flso, at the same time, players in the higher commercial category can e%pand to this sector. Mitigation( >y that time, we would have already started increasing our annual sales and hence can

enter in to the manufacturing of the components needed and thus can reduce the costs further. The company image of ;uality and relia!ility also would have started !uilding up. Ft the same time, we will also need to strive hard to reduce the varia!le costs, avail low cost capital and should start negotiating with suppliers to further drive down the costs. *e would have started getting profits out of our early investments, which can continue free cash flow for the rest of the usa!le period of the panels, and thus can provide capital for further growth. This will ena!le us to offer a competitive rate due to lower cost of capital. Techno#ogy Risk

The solar photo voltaic technology is in place for the past 3( years and the current +G technology has high relia!ility 83'I years usea!le life9 and low cost. The cost is e%pected to drop another 2': in another 2-' years due to economies of scale. There is a ris) that a new technology, which may !e mo re efficient or cheaper, can come and can cause the cost per unit to !e less than our rates. Flso, even though the grid electricity charges are going up, some !rea) thru can cause it to go lower than o ur rates. Mitigation(*e will need to constantly in touch with newer technologies and cost reduction techni;ues,

so that in such a situation, we can switch all new installations to one of these new technologies after analysing the cost !enefit ratio. Flso, we will try to upgrade our e%isting installations in case if the C>F of such an upgrade is proven to !e !eneficial. f we )eep our !rea) even as low as -' years, we will !e safe on e%isting installations as we can respond to price pressures more effectively

Execution Risk

/a"or ris)s which can adversely impact e%ecution of the plan are@ 09 39 29 9

There is a ris) that the re;uired s)illed resources will not !e availa!le at the estimated costs

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Mitigation(*e will !e outsourcing all the installation activities and will also )eep an option to add

additional service technicians other than the core supervisors and technicians on a per "o! !asis. *e will provide them initial training and will get agreements on service levels, which will !e lin)ed to their payments. Close customer feed!ac) mechanisms will ensure good ;uality. To mitigate unavaila!ility of components, we will use efficient supply chain manag ement mechanisms to )eep inventory at minimum, !ut have constant reorder points. *e will have agreements with suppliers to supply on a timely manner so that the ris) can !e transferred to them. or monitoring the usage and anticipated service, we will use installation and usage remote monitoring using an installed mo!ile S/ at each site which will transmit information a!out health of the plant and the usage. Capita#i*ation Risk

*e are planning to invest an initial Rs 0 Crore from our side and will !e loo)ing for >an) loan of  Cr, as we have more installations. >eyond the ' Crore limit, we will !e loo)ing forward to raise the remaining capital from Genture capitalists and later will !e loo)ing towards a pu!lic issue, once the mar)et sentiment towards this model is favoura!le. *e have a ris) that other than the founder$s investment, others might not materiali?e. Mitigation( Fs we are )eeping the varia!le costs to the !are minimum, we can continue to operate and

generate cash flows from the initial investments itself. So ca sh inflow will not !e stopped as in the case of an outright sale of e;uipment. *e will !e also doing outright sale of solar plants to those who are willing to go that route, so as to generate additional cash inflow. Flong with this, we will offer a price guarantee for an e%tended period for those customers who are willing to give a higher deposit and other price !enefits, and thus can unloc) the capital faster. The deposits will !e credited in their monthly !ills from the  th year onwards and thus can remove the ris) of huge cash outflows at the en d of the contract period.


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Business Proposal for Solar Energy Solution Business Plan Report

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