Business Proposal

CRESL
(Pay as you go model)

Interim Report

Contents
Executive summary................................................................................................................................... 3
The Market............................................................................................................................................. 3
The Products.......................................................................................................................................... 3
Management.......................................................................................................................................... 3
Objectives.............................................................................................................................................. 4
Mission................................................................................................................................................... 4
Keys to Success...................................................................................................................................... 4
Business concept...................................................................................................................................... 4
Why is solar energy more important in India?........................................................................................ 4
Product and services................................................................................................................................ 7
Solar power solutions............................................................................................................................. 7
Products................................................................................................................................................. 8
Start-up Summary.................................................................................................................................. 8
Market.................................................................................................................................................... 8
Marketing Plan........................................................................................................................................ 10
Product :............................................................................................................................................... 10
Price :................................................................................................................................................... 10
Place :.................................................................................................................................................. 10
Promotion :........................................................................................................................................... 10
Marketing Plan Process........................................................................................................................ 11
Human resources.................................................................................................................................... 12
Team.................................................................................................................................................... 12
Organizational Structure................................................................................................................... 12
Pay Structure.................................................................................................................................... 12
Other Benefits................................................................................................................................... 13
Time Period for Payment................................................................................................................... 13
Permissible deductions..................................................................................................................... 13
RISK COVERED UNDER SOCIAL SECURITY LAWS IN INDIA.................................................................14
Financial Plan & Analysis:........................................................................................................................ 15
Revenue Projections............................................................................................................................. 15
Break Even Analysis............................................................................................................................. 16
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Strategy Overview................................................................................................................................... 18
Vision................................................................................................................................................... 18
Competitor Analysis............................................................................................................................. 18
Strategy............................................................................................................................................... 20
Risk Analysis........................................................................................................................................... 22
Market Risk / Competitive Risk.......................................................................................................... 22
Technology Risk................................................................................................................................ 22
Execution Risk................................................................................................................................... 22
Capitalization Risk............................................................................................................................. 23

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Executive summary

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

The Market

The Indian solar energy sector has been growing rapidly, in the past few years, majorly due to
Governments initiatives such as tax exemptions and subsidies. Due to technical potential of 5,000 trillion
kWh per year and minimum operating cost, Solar Power is considered the best suited energy source for
India. Today the Solar power, has an installed capacity of 9.84 MW which is about less than 0.1 per cent
of the total installed renewable energy of Indias~ currently total installed renewable energy stands at
13,242.41 MW as per MNRE.
India's power sector has a total installed capacity of approximately 1,46,753 Megawatt (MW) of which
54% is coal-based, 25% hydro, 8% is renewables and the balance is the gas and nuclear-based. Power
shortages are estimated at about 11% of total energy and 15% of peak capacity requirements which is
likely to increase in the coming years.
The Products

CRESL, will supply, install and operate and maintain solar power systems . The company is offering Pay
as you go model( charges per Unit usage)
Management

CRESL is owned by few young professionals with rich experience in Operations, Banking, Engineering
and marketing field

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Objectives

To become the market leader of solar power solutions

To quickly gain market penetration within the first three years.

To develop a customer-centric organization based on cutting edge technology.

Mission

CRESLs mission is to become market leader of solar power solutions offering the highest quality
products and customer service while saving customers money and making positive contributions to our
environment.
Keys to Success

CRESL has identified three keys to success that help the company grow into a mature market leader:

Providing cutting edge, reliable, and simple-to-install and maintain solar power systems.

Broadening the market of solar power into a mainstream energy source.

Designing and implementing strict financial controls

Business concept

India is density populated and rich in solar energy. Solar energy is more important in India because most
of the days (300-330 days per year) in India is Sunny. On only land area, The solar power reception is
5000 per watt-hours per year (Wh/yr). The daily average solar energy incident over India varies from 4
to 7 kWh/m2 with about 15002000 sunshine hours per year (depending upon location), which is far
more than current total energy consumption. India has a great potential to generate electricity from solar
energy and the Country is on course to emerge as a solar energy hub. The techno-commercial potential
of photo-voltaic in India is enormous. Solar Energy is attractive because it is abundant and offers a
solution to fossil fuel emissions and global climate change.
Why is solar energy more important in India?

The fossil fuels like coal, oil and natural gas cannot remain the dominant sources of energy forever.
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Whatever the precise timetable for their depletion, oil and gas supplies will not keep up with growing
energy demands. Coal is available in abundance, but its use exacerbates air and water pollution
problems, and coal contributes even more substantially than the other fossil fuels to the build-up of
carbon dioxide in the atmosphere. For a long-term, sustainable energy source, solar power offers an
attractive alternative energy in India. It is environmentally clean, and its energy is transmitted from the
sun to the Earth free of charge and there is no out come any toxic gases.

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Kerala

Kerala is a state which constitutes Sunny shoreline, caressed by perpetual bluish waves that adorn the
endless beaches, with awe come green groves of coconuts that paint a shying borderline of natural
harmony. Kerala is a place of high lightning incidence when compared to most of the other parts in India
because of its weather patterns and the location of the Western Ghats. Higher population density and
vegetation density result in more casualties. Lack of awareness also aggravates the situation. The
average temperature in Kerala is 27.0 C (81 F). The temperature in Kerala normally ranges from 28
to 32 C (82 to 90 F) on the plains but drops to about 20 C (68 F) in the highlands. Temperature
during Winter in Kerala is maximum of 28C and minimum of 18C. Avg Summer starts in February and
continues till May, the temperature during Summer in Kerala is maximum of 36C and minimum : 32C.
The Average temperature during summer and winter in Kerala is absolutely fits to use Solar Energy.

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Product and services

Solar power solutions

We are targeting medium sized solar power installations (10KW 100 KW) for, Shops and
Establishments, Corporate offices, Banks, Shopping mall where the day time use is high. Huge initial
cost of installation and doubts with ROI is a major roadblock in installing solar power. But the rising
cost of commercial electricity and the higher rate of electric usage about 1000 Units consumption is
making the solar energy solution as a viable alternative not only for the diesel generators as a backup,
but also for the main power source. The other challenge for the initial investment can be resolved
through our innovative pay as you go model, and tie up with financial institutions. We will work out a
solution which can address both the concerns of the initial cash outflow from the users and the risks
involved in the pay back of loan for the Banks.

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Products

CRESL offers supply, install, operate and maintain solar power solution to Shops and Establishments,
Corporate offices, Banks, Shopping mall with a power requirement of 10 to 100kw and the cost will be
charged against the actual usage. The rate will be at par with the GRID power. In future the company is
planning to start manufacture PV panels in its own facility so the cost can further be reduced
Start-up Summary.

CRESL is planning to rent out a office premises in the outskirt of cochin city. This office will function as
the main office for all marketing, operational activities. The office will be set up necessary infrastructure,
Testing and Maintenance facilities and equipment.
Market

Consumers (especially younger generation customers) do show a preference for energy produced from
renewable energy sources but invariably fail to purchase renewable energy in sizeable numbers.
Initial research done over the last 1 month helped us to identify the barriers to solar purchases, address
consumer concerns, and look at ways to provide solar power plant solutions with guidelines that should
be integrated into their overall marketing approach.

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Based on initial discussions, there are four primary barriers to solar power plant adoption, and it is
mandatory that all these key barriers are addressed to increase adoption and accelerate the
implementation in the Kerala market.
Cost.

Consumers are worried on the huge up-front costs and lengthy payback periods which are

deterring them from installing solar power plant at their apartments/offices.

Reliability.

Concerns about its performances and capabilities on the reliability of solar panel

technologies. There is also some perception in the corporate industry that solar might not power the total
energy needs of the building/office.
Complexity.

The time consuming and complex nature of purchasing and installing solar energy systems

discourages potential customers.

Inertia.

The financial complexity and the perception that it is a long decision-making process to setup a

solar power plant results in some consumer inertia.

Though the consumers do understand the environmental benefits, these are not persuasive enough to
increase or accelerate adoption of solar power plants in commercial buildings/offices/apartments.
Therefore, the marketing program should create a connection with consumers through marketing
messages that would enhance interest and lead to further inquiry.
Marketing messages that are able to connect on a financial or value level are the ones which would
succeed.
Some of the steps to be taken to help identify the market/segment which needs to be focused are:
Market Segmentation by 3 categories:

Geographic
Demographic
Psychographic

By understanding the needs of segment we can tailor the marketing mix to deliver what the consumer
values. Each segment will offer growth and profit opportunities, so the trick is to deliver the best offer to
the best segment(apartment complexes, commercial buildings, offices, etc.).
The goal of the market research would be to help identify the following:
- Products/Services and the consumer fit
- Consumer Profiles
- Consumer Characteristics
- Consumer needs and wants

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Marketing Plan

The classic elements of marketing the 4 Ps: Product, Price, Place, Promotion offer a useful matrix to
assess the solar power plant program. Solar program initiatives should address each of the 4 Ps.
Product : We can evaluate the Product 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 (e.g., price, reliability, quality issues) helps identify the opportunities and the barriers.
Price : This is one of the biggest barriers for solar power plant adoption in the marketplace. The
government is helping to some extent in financing of such plants, and helps overcome the consumer price
concerns. Currently, financing options are increasing the access to solar power and enabling it to new
groups of consumers.
Place : Place through which the solar is sold, also is an area where solar programs have an important role
through their work with installers, developers, and suppliers. Building a strong service/supplier network is
critical in keeping up with rising demand; ensuring that consumers can easily find an engineer/installer to
setup/fix the solar plant within the shortest duration.
Promotion : This should be a primary focus so that it can increase the visibility of solar installations and
broaden the appeal. Using communications and promotional strategies to favorably present solar in the
marketplace and ensuring that the right messages are presented to the public will help build a stronger
market for solar technologies.
Through the lens of Product, Price, Place and Promotion, it is very critical to better understand the
customer through market research, have focused efforts on specific target customer bases (customer
segmentation), and address key messages to reach those audiences effectively and efficiently
(communications).
Improving the process of purchasing solar will not alone make a difference in overall sales if the price/value
equation has not been addressed. If consumers are not confident about the reliability of solar, improved
pricing alone will not matter. All elements must work together to motivate the target customer to take action.
Therefore, the development of a solar marketing plan must start with the consumer in mind.
Conducting both quantitative and qualitative studies of these customer segments provided valuable insights
to help shape the development of smart marketing initiatives. While there is much to learn from these studies,
the key findings point to several essential elements for an effective solar marketing plan.
Based on these studies, the remainder of this report will
1) identify major market barriers,
2) detail smart marketing strategies to address each barrier, and
3) recommend action steps to implement a successful marketing plan.

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Marketing Plan Process

C u stom er
Re search

Ba rrie rs &
O pp o rtu n iti
es

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M a rke tin g
G oals

Page 11

M arketin g
Prog ram s/T
a ctics (4 Ps)

D eve lop
Bu d ge t

M on itor
an d
Evalu ate
S ales/Resu l
ts

Human resources
Team

The management would comprise 2 Managers- Marketing Manager and an Electric Supervisor.
There is one Assistant marketing Manager, and one accountant.
There are two highly skilled electricians.
Initially Office will be in Cochin be in Cochin.

Organizational Structure

Managing
Director

ELECTRIC
SUPERVIS
OR
MARKETIN
G
MANAGER

ELECTRICI
AN
ELECTRICI
AN
FIELD
MANAGER

Pay Structure

Managing Director-Rs.40000/- per month + profit share

Marketing Manager-Rs.20000/- (Other benefits by way of performance linked benefits to the extent

of Rs.1000/- per kilo watt sold over and above the monthly target.)
The Assistant Manager (Marketing) will be paid a monthly salary of Rs.12000/- (Other benefits by
way of performance linked benefits to the extent of Rs.1000/- per kilo watt sold over and above the
monthly target.)

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The electricians will be paid Rs.10000/- consolidated (Overtime for a maximum of 40 hours per

month allowed) .
Accountant will be paid a salary of Rs.8000/-.
Other Benefits

CUSTOMARY BONUS
GROUP LIFE INSURANCE
CONVEYANCE CHARGES

Time Period for Payment

Before expiry of 7th day after the last day of wage period
Incase of termination of employment (including Closure)
before the expiry of the second working day from the day on which
employment is terminated.
Mode of Payment
o Will be paid by cheque or by crediting the wage in the bank
account .
Permissible deductions

Deductions for absence from duty

Deduction for damage to or loss of goods expressly entrusted to the
person for custody
Recovery of loans made from any fund

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RISK COVERED UNDER SOCIAL SECURITY LAWS IN INDIA(*All covers to be applicable only after
one year)

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Financial Plan & Analysis:

Revenue Projections

CRESL
Revenue Projections
Years 1 to 5
(Rs)
Year 1
Year 2
Year 3
Product A
Number of Units
Price per unit
Total (Rs.)
Service B
Number of Customers
Fee per Customer
Total (Rs.)
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

1,01,12,500

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Months
Month 1
Month 2
Month 3
Total 1st Quarter
Month 4
Month 5
Month 6
Total 2nd Quarter
Month 7
Month 8
Month 9
Total 3rd Quarter
Month 10
Month 11
Month 12
Total 4th Quarter
Total for year
Assumptions taken:

Year 1
0
0
0
0
0
0
0
0
1,01,250
1,51,875
2,02,500
4,55,625
1,51,875
1,82,250
2,22,750
5,56,875
10,12,50
0

Revenue
s by
Months &
Quarters
(Rs)
Year 2

Year 3

Year 4

Year 5

1,64,375
1,64,375
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
3,94,500
3,94,500
11,50,625

2,78,125
2,78,125
3,89,375
9,45,625
3,33,750
3,89,375
3,89,375
11,12,500
4,45,000
5,56,250
5,56,250
15,57,500
6,11,875
6,67,500
6,67,500
19,46,875

3,91,875
3,91,875
5,48,625
13,32,375
4,70,250
5,48,625
5,48,625
15,67,500
6,27,000
7,83,750
7,83,750
21,94,500
8,62,125
9,40,500
9,40,500
27,43,125

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

25 shops/complex, 1 complex starting from Month 6/Year 1

Another 25 shops/complex, starting from Month 9/Year 1
From Year 2 onwards, minimum of 2 complexes added to customer base

1MW = 7cr
.6MW = 5cr
.1 MW =
68L
.05 MW =
45L
20 shops/complex = small shops = .025 MW
=
1KVA / shop / day / connected load

25

per site =
25KWA
cost < 20L
(max 22L)
BE coming around 2.5 years (with Year 1 of customers)
Maint fee = INR 5000/customer/year

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KWh

Break Even Analysis

1 Crore Investment from
Founders + 4 Crore Bank Loan

Rs 50000000 Initial Investment

Rs 75000
666.6666667
0.5
333.3333333
10
25
1000000
9
Rs 9000000

Per KWp investment

in equipment
Possible KWp with 5
Crore investment
Efficiency
Net Capacity
Number of Usage
Hrs/Day
Number of Working
Days a Month
KWHr / Year
Rate / Unit
Total Cash inflow per
year, if all units sold

Selling Price

per unit

Variable cost

Assumes negligible variable

cost

Total Fixed cost

Rs 50000000

Total Fixed cost after

capital subsidy @ 30%

Rs 35000000

Break even sales

units ~
Typical units
consumed by a mall
per month
Typical units
consumed by a mall
per year

3888888.889
12000
144000

Number of malls that

can be serviced

Number of years to
break even ~

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Page 17

KWHr per month

KWHr per year

Assuming all units are sold in

first year itself.
* All amount in RS

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Strategy Overview
Vision

Our vision is to be able to place a CRESL branded power plant powering every commercial
establishment in India and through that become the largest commercial solar power supplier in India.
We will do everything in our capacity to ensure reliable and stable power supply and excellent
customer service and support for our customers. We envision providing maximum return on
investment to the shareholder by increasing profitability through adopting new technology and
practices to minimise cost and maximise output.
The following will remain as our core values:

High quality customer service to achieve customer delight

Continuous improvements in service quality , value to the customer and share holder wealth
Constant search for the most efficient and cost effective technology alternatives to deliver value to
both customers and share holders
Strengthen the bondage between company and its employees so that each can contribute to the well
being of the other and jointly strive to achieve company goals and values

Competitor Analysis

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Factor

Products

Price

Quality

Selection

Factor

Service

Solar
Energy

Renewable
Stable and
Energy product reliable

High Initial
Cost, lower
variable cost,
life >25 Yrs

Expertise

Sales
Method

Credit
Policies

Importance
to
Cost overruns due to Customer
2

Customer
Proven over time,
worries about but lacks reliability. fuel price hikes, higher
reliability, cost Cost can increase maintenance
implications etc due to scarcity,
voltage fluctuations

Long term cash Huge initial

flows
investment

Pay per watt and

Big initial investment, 4
government
life approx. 10 Ye,
intervention on price High variable cost

Bad image due

to earlier
models being
expensive and
low life

Solar
Energy

Strength

Weakness Grid Electricity Diesel Genset

Customised
service due to
competition

Good service
network

Relatively new Mediocre

technology

High reliability

Constant and
trouble free
supply

Dependent on
sun and hence
cloudy days,
output is low

Moderate with
High Reliability
frequent fluctuation
in voltage and
supply

High Stability

Stable power

None

Moderately Stable

High Stability

Expertise
required is low
as technology
is proven
New

Huge data
None
High
base available
from suppliers
and on internet
N/A
Relatively new Govt. backing
technology and provides suppliers
new company credibility

High

Many reputed
companies in place

Not a factor as
we provide
onsite service
Direct
Marketing

Flexible
options to suit
customer need
Can explain
pros and cons
and give
personalised
options

Not a problem in
most cases

Not a problem in most 2

cases

Established player
and no marketing
needed due to
monopoly

Marketing through all 1

channels

Company

Location

Weakness Grid Electricity Diesel Genset

Good quality
25 Yrs
products
warrantee
available and is available
used for major
installations.
Constant power
A
wide variety Global network
output
available
of supply

Reliability

Stability

Strength

Pay as you go No risk for

option with pay customer
after use

Reasonable quality Constant power

with voltage
output
fluctuations and
occasional failures

Govt support No Choice. Has to

may not be
go with local
there long term provider

Availability of
roof top space
and sun
Will take time
to gain market
share

Credit
Pay as you go
collection may options
pose finance

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Wide selection
available

Importance
to
Good service network Customer
4

Outright purchase of 3
the genset and own it

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Strategy

To be consistent with our Vision statement, we will be 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
horizon of profitable period, and can achieve above average return on equity. There are good amount
of government support, which will reduce the cost (various tax breaks in imports and a 30% capital
investment subsidy on installations below 100 KWp capacities). The life of a solar panel is in excess
of 25 years (Manufacturers give a guarantee of 25 years with at least 80% efficiency). The photo
voltaic process does not require much maintenance and hence the variable expense is minimal. As per
the latest estimates, commercial solar installations with no subsidy can break even in less than 5-8
years, even when you are giving electricity under Rs 9/ Unit of electricity.
When we analyzed the solar energy landscape (and used the competitor analysis above), we observed
a few points1. The number of players in the residential sector where the installed capacity per household is between
1-5 KWp is intense, with a lot of players. The competition is cut throat and you will get thin margins.
The cost of energy production in this segment is between Rs4 to Rs 6 per Unit, while the slab rate of
electricity for them starts from as low as Rs 2 / Unit. Also, the consumption peaks after sunset, which
makes lot of wasted energy. The image of company is a big factor in purchase decisions as well.
2. At the same time, for the small and medium commercial sector (Consumption will be between 20KWp
to 100 KWp and which includes corporate offices, shopping malls, Hospitals, large Shops and
Medium sized Businesses etc), the adoption is very less, mainly due to the huge capital investment
required for Solar and the scepticism about the ROI of such investments. At the same time, the cost of
electricity for this sector is in excess of Rs 9.5 per unit, which can go as high as Rs 16/Unit. When we
checked sources like MNRE website and other reputed sources, it is observed that the cost of
production of solar Photo-voltaic electricity at this level can be as low as Rs4/Unit. Even after
factoring in all the other costs, you can break even in 5-8 Years. You can expect a continuous cash
flow for the next 30 years with minimal variable expense. Also, besides the cost advantages, such
institutions also can save by moving away from backup power sources like Diesel generators,
inverters etc. The output is constant and without any fluctuations.
Our strategy is to provide pay per unit installations on the roof tops of such establishments. We will use a
modular design, which require zero piercing on the roof and an easy to assemble, dismantle and
upgradeable/down gradable capacity, which will enable us to service our customers according to their
needs.

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We will take a small (around 10% of the cost) amount as a security deposit from the customers, which
will be returned towards the end of the contract term (minimum 5 years).
The rate chargeable will be less than the starting range of the commercial electricity. Also, we will be
able to run all load from 8 Am to 06:00 PM directly from the device and another 2-3 hours from the
stored power from battery. This will allow us to service 10-12 hours of their peak load from Solar, which
will enable us to utilize the full capacity of the power plant. This will benefit the customer by driving
down their costs and getting reliable and fluctuation free electricity. Also, this will maximise shareholder
ROI by efficiently utilizing the installed capacity to the maximum and thus high ROI.
Initially, all the components will be purchased from reputed suppliers. The installation will be outsourced
to minimize variable cost. The installed system will be inspected by the staff supervisor and will be
commissioned.
Once the annual installations go beyond 0.5 MWp, we will begin assembling and lamination of the solar
panel assembly and inverters. This will enable us to drive down the capital costs, and also will enable us
to service faulty solar panels and inverters in house to maximise useable life.
Our initial targeted markets will be Major cities in Kerala where such large establishments are located.
We will expand to rest of South India in another 4-5 years. We will expand to rest of India within 2-3
years from then.
In Kerala, our initial operations will be by outsourcing most of the work except maintenance, marketing
and book keeping/accounting. This will enable us to keep the variable costs to be in line with our sales.
Once the sales are consistently increasing, we will start the production of components etc.
For entering other markets, we will use a partnership approach, where the quality will be ensured by us
by constant monitoring, while many of the functions will be done by local partners, so as to use their
knowledge of the locality and connections. Like Maruti Suzuki, we will stipulate the maintenance process
and customer complaints will be taken up seriously. Quality will not be 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 Analysis
Market Risk / Competitive Risk

As of now, the pay per use for small/medium commercial establishment is minimal or nil. So we will
not face much issue here. But once our model proves to be successful, there will be intense competition as
most of those who are in the sales market can come up to this segment. Also, at the same time, players in
the higher commercial category can expand to this sector.
Mitigation:By 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 quality and reliability also would have started building up. At the same time, we will
also need to strive hard to reduce the variable costs, avail low cost capital and should start negotiating
with suppliers to further drive down the costs. We would have started getting profits out of our early
investments, which can continue free cash flow for the rest of the usable period of the panels, and thus
can provide capital for further growth. This will enable us to offer a competitive rate due to lower cost of
capital.
Technology Risk

The solar photo voltaic technology is in place for the past 20 years and the current PV technology
has high reliability (25+ years useable life) and low cost. The cost is expected to drop another 35% in
another 3-5 years due to economies of scale. There is a risk that a new technology, which may be more
efficient or cheaper, can come and can cause the cost per unit to be less than our rates. Also, even though
the grid electricity charges are going up, some break thru can cause it to go lower than our rates.
Mitigation:We will

need to constantly in touch with newer technologies and cost reduction techniques,
so that in such a situation, we can switch all new installations to one of these new technologies after
analysing the cost benefit ratio. Also, we will try to upgrade our existing installations in case if the CBA
of such an upgrade is proven to be beneficial. If we keep our break even as low as 4-5 years, we will be
safe on existing installations as we can respond to price pressures more effectively

Execution Risk

Major risks which can adversely impact execution of the plan are:
1)
2)
3)
4)

There is a risk that the required skilled resources will not be available at the estimated costs
Unavailability of components on time to install it
Issues related to service level not met for servicing and installation
Monitoring the usage

:Business Plan Project (BPP) 2013-14.

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Mitigation:We will

be outsourcing all the installation activities and will also keep an option to add
additional service technicians other than the core supervisors and technicians on a per job basis. We will
provide them initial training and will get agreements on service levels, which will be linked to their
payments. Close customer feedback mechanisms will ensure good quality. To mitigate unavailability of
components, we will use efficient supply chain management mechanisms to keep inventory at minimum,
but have constant reorder points. We will have agreements with suppliers to supply on a timely manner so
that the risk can be transferred to them. For monitoring the usage and anticipated service, we will use
installation and usage remote monitoring using an installed mobile SIM at each site which will transmit
information about health of the plant and the usage.
Capitalization Risk

We are planning to invest an initial Rs 1 Crore from our side and will be looking for Bank loan of 4 Cr, as we
have more installations. Beyond the 5 Crore limit, we will be looking forward to raise the remaining capital
from Venture capitalists and later will be looking towards a public issue, once the market sentiment towards
this model is favourable. We have a risk that other than the founders investment, others might not
materialize.
Mitigation:As

we are keeping the variable costs to the bare minimum, we can continue to operate and

generate cash flows from the initial investments itself. So cash inflow will not be stopped as in the case of an
outright sale of equipment. We will be also doing outright sale of solar plants to those who are willing to go
that route, so as to generate additional cash inflow. Along with this, we will offer a price guarantee for an
extended period for those customers who are willing to give a higher deposit and other price benefits, and
thus can unlock the capital faster. The deposits will be credited in their monthly bills from the 4 th year
onwards and thus can remove the risk of huge cash outflows at the end of the contract period.

:Business Plan Project (BPP) 2013-14.

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