Description
The project in the first year is concentrated on Maharashtra region mainly concentrating on Pune and Mumbai. It includes market analysis, marketing strategies, organization structure financing and profit and loss account.
BUSINESS PLAN
HIGH EFFICIENCY SOLAR WATER HEATERS
8/31/2009
Executive summary
The project deals with establishment of a plant manufacturing greater than 93% efficient drainback evacuated-tube closed loop active solar water heaters (suited for weather conditions and water of India) of capacity 2000 L initially in first year and later diversifying into smaller capacity heaters. The project in the first year is concentrated on Maharashtra region mainly concentrating on Pune and Mumbai. The demand is huge as the market in India has huge potential because of strategic location. It is nascent with existing small players and unaware target audience. The expected demand in 1st year from residential complexes, hospitals, hotels and dormitories across Pune and Mumbai is expected to be 1050 units which will grow to 1260 units in 5th year on a conservative basis. The initial investment is expected to be 55818000 Rs. which will be financed by 20% equity and 80% debt from bank of Maharashtra subsidized at a rate of 2% for 6 years as a part of Government initiative because we are investing in renewable source of energy. The project is financially viable with IRR of 13% and break-even in five years with a conservative approach of growing 5% by the end of second year and 15% thereafter. The organization has 5 promoters having expertise in finance, marketing, R & D, production, HR respectively who will be contributing 20% initial investment. The organization will employ 60 employees including laborers, technician, clerks and supervisors. Vision: - To be an innovator in the non renewable energy sector and provide environment conscious products to the consumers. Mission:-The aim of the organization is to manufacture and supply high quality and cost effective solar water heater to consumers and provide value proposition to them in the form of excellent services and products.
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Contents
Introduction to business concept ................................................................................................................. 3 Market Analysis............................................................................................................................................. 4 Marketing strategies ................................................................................................................................. 5 Target audience .................................................................................................................................... 5 Sales Plans ............................................................................................................................................. 8 Pricing Plans .......................................................................................................................................... 8 Promotion Strategy ............................................................................................................................... 9 Distribution ......................................................................................................................................... 14 Research and development ........................................................................................................................ 15 PRODUCT DESCRIPTION .......................................................................................................................... 16 Organization Structure................................................................................................................................ 17 Financing ..................................................................................................................................................... 18 Appendix ..................................................................................................................................................... 21 1.References ........................................................................................................................................... 21 2.Profit and Loss Account ....................................................................................................................... 22
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Introduction to business concept
According to research report “Indian Solar Energy Market Outlook 2012” from a leading research company RNCOS, Solar energy offers enormous potential for a tropical country like India where around 45% of households, mainly rural ones, do not have access to electricity. India receives solar energy equivalent to more than 5,000 Trillion kWh per year, which is far more than its total annual energy consumption. The country’s geographical location, large population and government support are also assisting it to become one of the most rapidly emerging solar energy markets in the world. Consequently, the country is becoming a favorite investment destination for both local as well as global players. As the world is moving towards faster development, the energy needs are growing at an exponential pace. Majority of the conventional sources of energy like petrol, diesel, Electricity etc. are non renewable. Hence these resources are depleting day by day and the gravity of this energy crisis is further evidenced from the instances in the past where nations like Iran and Iraq have were drawn into wars to gain access to their energy reserves. In the wake of this, many developed and developing countries are looking towards the renewable sources of energy. India is also suffering from a severe energy crunch wherein the demands are endlessly succeeding the supply. Therefore, renewable energy sources can play a vital role in a developing country like India. Renewable energy (like the solar energy) technologies in India have been promoted through R&D, demonstration projects, dissemination projects/programmes supported by government subsidies and fiscal incentives. The contribution of renewable energy has not been significant n the overall energy scenario and thus it can be exploited to make a huge contribution in the Indian energy market. Solar energy accounts for less than a fraction of the total renewable energy installed capacity in India. The market of solar water heater is still untapped because of lack of awareness about the recent technological advances. One of the main reasons for this is the lack of adequate investment in solar PV manufacturing and R&D in India. Moreover people question the efficiency of solar heating devices. Many companies in India manufacture solar water heaters but these are not becoming popular in the domestic sector because of their high cost. To promote renewable eco friendly sources of energy, many States provide subsidies either on a lump sum or per unit basis to the users of solar heaters. There are also subsidized lending rates for purchasing a solar heater. India is the only country with a Ministry for Renewable Energy and a lot of initiatives are being taken for promotion of non conventional sources of energy. This would enable the domestic solar PV industry to provide cost-effective and sustainable solutions to the domestic market and compete with the rest of the world. Solar water heating system is a relatively mature solar thermal technology that has reached the stage of commercialization in India. Solar thermal technologies have a natural advantage in India due to the fact that the average radiation is 4.5–6 kWh/m2/day with an average of 280 clear days in a year. The technical potential has been estimated as 140 million sq.m. of collector area. More than 0.70 million sq.m. of collector area has been installed so far in the country for water heating which is less than 1% of the estimated potential. 3
Economics of SWHS is affected by the weather conditions. The ambient temperatures and the solar radiation together affect the amount of the auxiliary heating required. The economics have been found to be most effective for Pune, amongst all three cities selected, for all water usage patterns and capacities. The savings in electricity for Mumbai and Chennai are 80-90% and 70-82% of that in case of Pune, respectively. This difference in savings with location is due to difference in ambient temperature and insolation. We, a team of six MBA graduates from SCMHRD, have expertise in various fields of management and have therefore developed a business plan to invest in High efficiency solar water heaters which would enable us to tap this market which has not been utilized to its full potential and would help us carve a niche for ourselves before the market gets saturated. Our extensive R&D has helped us to develop high efficiency solar water heaters which would heat a gallon of water at a minimal cost of 10 paisa as opposed to the conventional method which costs around 65 paisa to heat the same amount of water. The electricity savings for the same would be 7000 Rs per annum. The technology is new and is not easy to obtain which would act as an entry barrier for the competitors. The capital intensive nature of the business would also act as a deterrent to the competition.
Market Analysis
Government has become Pro-environment and has already made it mandatory to have solar water heaters for the below types of buildings in NCR: ? ? ? ? ? ? ? Industries where hot water is required for processing Hospitals and Nursing homes including government hospitals Hotels, motels and banquet halls Large canteens Corporate buildings Residential buildings build in an area of more than 500 sq meters plot All government buildings, residential schools, educational institutes and tourism complex
The Government of Maharashtra has issued orders to urban local bodies to make solar water heaters mandatory in functional buildings. Moreover government has decided to make Maharashtra solar hub in the coming 5 years hence the same is very likely to be implemented here. The solar water heaters provided by Racold are the market leaders with a market share of 45% all over India. The scenario is not very different in Pune with all the leading builders and other commercial users preferring Racold’s water heaters. The rest of the market is shared by small local manufacturers who assemble the equipment and sell them for cheaper prices. Hence the market is very attractive and has a tremendous potential if customers are well educated and enticed by additional service and maintenance.We intend to capture a 25% market share in the next five years.
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In order to reach our target market, we need to create a brand Solsys that creates the following perception in out customers: ? ? ? ? ? ? ? High efficiency systems Safe to use Cost effective Easy to maintain Reliable Robust User friendly
Present maket scenario(by value)
Local Manufacturer s 55%
Racold 45%
Marketing strategies
Target audience We shall target the entire state of Maharashtra in our initial stage beginning with Pune and Mumbai. Through our online presence though we have an advantage and capability to reach throughout India, we will concentrate in a lower area as we need to provide service support as well to our customers. The main drive behind each of these customers buying and installing solar water heaters were studied as following: Commercial Establishments: This population buys solar water heaters because ? It is mandated by the government to use solar water heaters in the establishment ? It is cost effective ? It will help attract environment conscious customers To attract his population, we have to offer low cost and high efficient solar water heaters to them. We need to promote the product as cheap and highly efficient. 5
The following establishments come under the commercial category: Hostels: There are 51 hostels in Pune and 75 hostels in Mumbai out of which ten are installed with Solar water heaters Hotels: There are 34 hotels in Pune which are suitable for establishing solar water heaters Hospitals: India is becoming a global destination for health tourism. As a part of this, Pune is also attracting a number of health tourists in addition to the general tourist population. Hence there are many corporate and multi specialty hospitals coming up in and around pune. As of now there are 23 corporate and multi specialty hospitals in and around Pune and 175 in Mumbai. All these hospitals will have to change to solar water heating systems when the regulation comes in to effect in Pune. Though this will be capital intensive for hospitals, the savings in the cost is attractive for them. We need to emphasize this point while promoting our product to this target population. Apartments: There are 64 upcoming apartments which are either under construction or yet to be constructed in Pune and more than 200 in Mumbai. Increasingly these buildings are using solar energy for heating water. Solar water heating facility is being mentioned in the brochures to promote their ventures. We need to pitch the following builders to promote our solar water heating plants: The upcoming ventures are by the following builders in Pune and Mumbai: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Manav Promoters K RAHEJA CORP Puranik Builders Rachana Associates Tejas Properties Bansal Infracon Aditya Builders Karan Group Soul Space Atlantis Omega Promoters Trikon Builders Kasturi Housing Bhandari Associates Shagun Developers Mahindra Lifespaces Concord Spaces Rachana Housing Development Co.Pvt.Ltd. Amar Builders Harshad Constructions Rama Group Queenstown, Chinchwad Bhujbal Construction Company 6
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Sanjay Developers G. K. Developers Venkateshwara Amit Enterprises Park Royale Kolte Patil Developers A. V. Bhat & Co. Goel Ganga Developments M/s. Bhujbal Brothers Construction Co. 5 Star Constructions Lunawat Landmarks Nyati Group Vilas Javdekar & Associates Sonigara Homes Deshpande Builders Wadhwani Construction Pratham Yash Promoters & Builders Gokhale Builders Promoters & Developers Marvel Realtors
Industrial: Pune has got many industries in and around it. Pune has become an automobile hub of the country. It has got many blue chip companies like ? ? ? ? ? ? Bajaj Auto Tata Motors Bharat Forge Daimler Chrysler Mahindra Kinetic Motors
In addition to these automobile industries Pune has become the IT hub of Maharashtra. Pune has got the highest number of IT employees after Bangalore in India. The IT companies operating out of Pune are numerous, to mention a few of them: ? ? ? ? ? ? TCS Infosys Wipro Technologies Cognizant Technologies Amdocs Syntel 7
? Satyam etc.. All these are infrastructure intensive in nature and require high efficient solar water heaters to satisfy their hot water requirements under the above directive by the government.We would provide these industries with energy efficient, low cost solar water heating systems. Household: Households have the following incentives for using our water heaters: 1) They are lower in cost when compared to a geyser 2) Low maintenance costs 3) Electricity savings 4) Environment friendly The profile of a family that would use our water heaters would look like below: ? A nuclear family with mother, father and to children ? Average annual income of 3 lakh rupees and more ? Average age of the family is between 20-25 Sales Plans ? We will target promoters of apartments in Pune first ? We will approach banks who would provide financial succor to developers who are willing to promote the usage of solar water heaters ? Government provides support to green projects along with tax concessions ? In the next two years, we would target corporates ? The last phase of out target will be households with smaller capacity solar water heaters. Pricing Plans We would be selling our product at a price of Rs 200000 per unit. According to the Delhi Govt.’s report the selling price by the local manufacturers is around Rs 260000. This gives us a huge cost advantage over our competitors. Initially, the pricing will be done on a cost plus basis(penetrative strategy). As there is little competition in this segment of the market, we can price our product a bit higher and recover a part of the cost as subsidy from the government. According to the concept of shadow pricing, if the society at large is getting higher benefits that what it expends on the product, and then project becomes self sustainable. The shadow benefits are through tax and interest subsidies provided by governments to the customers if they buy solar water heater.
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Promotion Strategy The major aspect of the promotion of the high efficiency water heater would emphasize on highlighting the benefits and environmental implications of the product to the builders in the first phase since we attempt to attract this segment in the first phase of our project implementation. Our aim would be to deliver “One voice, one message” to the builders by addressing their top concerns, including brand name recognition, cost efficiency and the consumer demand. Our Promotional effort would encompass the following: ? Persistent PR campaigns to promote awareness among the builders. ? Forging of alliances with the suppliers of the raw material required that are required for the product. ? Providing valid case studies or demonstration communities that support energy claims and showcase consumer acceptance. ? Full advantage of the government sponsored programs. ? Participation in builder associations. ? Participation in trade shows in the target markets. ? Advertising to builders and architects in their trade publications. ? Technical and design support to builders, installers, utilities and architects. ? Promotional materials made available to builders for their sales offices. ? Sales training for builder sales staff and design center staff.
Our business plan would target the builders in the first phase and as our business gains momentum we would expand to the domestic segment. Thus, our initial strategy would be to create awareness about our product and attract the major builders in Pune and Maharashtra and to procure mass orders. The estimated timeline for the same can be presented as follows: EVENTS PR Campaigning Alliance with the suppliers Participation in Trade Shows Participation in Builder Association Advertisement in Trade publications Demonstration Government Sponsorship Technical and design support Sales Training Promotional offer 0 PROPOSED TIMELINE(weeks) 6
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? The PR campaigning forms the backbone of an effective marketing strategy and thus our emphasis would be laid on it as well. Creating press releases for distribution in local publications, including newspapers and magazines, announcing new solar communities will be a central part of this endeavour. Internet Advertisements would also be used. The information given out would be the price, usage, environmental application, safety, ease, warranty and benefits of the product. (The list of the initial targeted builders and the Print Media to be targeted is listed at the end of this segment.) ? Strong alliances with manufacturers and additional trades would also prove to be a profitable proposition here since this can help us to promote energy efficient packages as a method of product differentiation and niche marketing for builders. In the future this alliance would also help us when we expand our market to the domestic segment. ? The ability to illustrate product acceptance and efficiency with case study examples or referrals to existing new home communities will strengthen the presentation to the builder. With additional valid evidence to support industry claims, builders will be encouraged to seriously consider energy efficient packages and solar water heaters. ? Participation in building trade associations will show dedication to the industry and increase exposure to the market. Regular advertising in trade publications will increase awareness. Participation in major building industry trade shows and at smaller, regionally important trade shows will also contribute to building awareness within the industry. This would also act as a tool to identify the desiring customers. ? Creating a point-of-purchase display to draw the builder’s attention to the presence and effectiveness of solar water heating will also serve as an additional sales tool and support the efforts of the on-site agent. ? Creating training materials which allow the on-site sales agent to accurately portray the benefits of solar water heaters, along with the other features would also be incorporated. This effort is key to enlisting their support and assisting them in properly representing the builder’s homes. The Training material would be simple and the message would be clear and distinct. ? We also plan to have a customer care centre wherein we would initially hire 2-3 employees who would answer the queries raised by the prospective customers regarding the various features of the product. This would also help us in raising awareness about the product and would help us establish superior servicing standards. ? Buy- in of the government would also be an important strategy as the government supports such initiatives of energy conservation and provides subsidized loans and discounts on the purchase of products like solar water heaters. In addition, it also gives the provision of tax evasion to the users. A full advantage of this fact would be taken during the advertising and promotion to attract target audience. 10
? Sponsorship for the expenditure on the advertisement and promotion of the product can be arranged from government institutions, Trade Associations, and Public Utility companies. An alliance with these would also help us gain the confidence of the builders. Promotion Chart:
CUSTOMER
SALES
INSTALLATION
CUSTOMER SERVICE CENTRE
PROMOTION IN MUNICIPALITY
Sales and installation
PROMOTION IN PRINT MEDIA Customer centre and marketing
Since many customers are not crystal clear about the various facets of the solar heater and its added benefits we propose to have a customer service centre which would help raise the awareness about the world wherein our employees would answer the queries of the builders regarding the product, its features, its benefits, installation, maintenance, services provided by us, etc. The interest created by the customer centre would be diligently followed up by sales and installation services. This would also enhance our authority in establishing a qualified product portfolio.
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List of Targeted Builders: ? ? ? ? ? ? ? Regus Group Naiknavare Developers Pvt Ltd Mahindra Lifespace Developers Hiranandani Developers Nahar Group Raheja Builders Ajmera Group of builders
List of Targeted Newspapers: ? ? ? ? ? ? Sakal Times Dainik Kesari Navbharata Times Times of India Bombay Times Maharashtra Times
List of targeted Websites: ? makaan.com ? Bestbuildersindia.com ? Punesite.com List of targeted Magazines: ? India today ? Catalogs ? Maayboli Targeted Trade Associations: ? Promoters & Builders Association Of Pune ? The Bombay Custom House Agents Association
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Our Print Advertisement:-
SOLSYSTM
Model: Drainback Evacuated Tube Active Capacity: 2000 L Warranty: 5 years Installation and Maintenance free
Benefits: 1. High efficiency 2. Safe to use 3. Affordable 4. Maintenance free 6. Installation Free 5. Saves electricity: Up to 7000/- per year Book early and avail subsidized discounts and loans from the government!!! SAVE 55 paisa for each Gallon of water!!
Contact for free Demo: Bio-heater Manufacturers and suppliers, SIC Campus, MIDC, Rajiv Gandhi InfoTech Park, Hinjewadi, Pune 411057 Phone: +91 9766910136 Enjoy Loan at 2% and tax benefit
Save Energy, Preserve ENVIRONMENT
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Distribution Our factory will be situated at Chakan in Pune. We will build solar systems according to the orders received. We would store minimum inventory and our cash to cash cycle will also be short. We will do sales using the following tools: 1) Online: We will have an online presence. In addition to having our own website, e would be present in online sites like alibaba.com, e-bay etc… and put our quotes on the web. Thus we can collect orders online. In these cases, the customers will pay online using credit cards 2) Through Sales Force: Our Sales representatives would directly contact the customers and take direct orders from them. Our call centre executives would first contact our potential customers and arrange for a sales demo with the representatives at their place. Our sales representatives would go and collect the sales orders from these people Due to the above distribution strategy our channel would look like below: Online sales:-
Customer
Sales through Sales Force
Web Portal
Solsys
Customer
Sales Representative
Solsys
Advantages of our distribution Strategy:
1) We will have fewer inventories. This will help us to save costs. Hence this would become a competitive advantage 2) We will be able to collect our cash from our customers before we actually start manufacturing for them. Hence we will have a cash advantage and the debtors will be very low 3) Since we are building to the order of our customers, we can give them customized solutions. This will be another competitive advantage for us. 14
Research and development
A solar water heater consists of a collector to collect solar energy and an insulated storage tank to store hot water. They can be used in any climate, and the fuel they use—sunshine—is free. There are basically two types of solar heaters. Active which are more efficient as compared to passive solar water heaters but need more maintenance. Passive which are less efficient as compared to active solar water heaters but need less maintenance and have long life. Three types of solar collectors are used for residential applications:
? ? ?
Flat-plate collector Integral collector-storage systems Evacuated-tube solar collectors
Since we are focusing on high efficiency and targeting builders mainly in Pune, we will be manufacturing active solar water heaters. Active solar water heaters are of two types:Open loop:- Open-loop active systems use pumps to circulate household water through the collectors. This design is efficient and lowers operating costs but is not appropriate if your water is hard or acidic because scale and corrosion quickly disable the system. Closed loop:- These systems pump heat-transfer fluids (usually a glycol-water antifreeze mixture) through collectors. Heat exchangers transfer the heat from the fluid to the household water stored in the tanks. Double-walled heat exchangers prevent contamination of household water. Since water in Pune is hard we will be manufacturing Drainback active closed loop solar water heater using evacuated-tube solar collectors since these collectors are best for domestic applications requiring very hot water and direct current (DC) pumps powered by small solar-electric (photovoltaic, or PV) panels which will not need any cost since they will be powered by solar energy. Raw materials required for Active closed loop solar water heater with evacuated-tube solar collectors:Component COLLECTOR BOX STORAGE TANK THERMAL INSULATION EVACUATED-TUBE COLLECTOR PUMP PHOTOVOLTAIC CELLS SUPPORTS FOR TANK AND COLLECTOR PIPES Raw materials Aluminium, aluminium magnesium alloy for corrosion resistance Copper and Aluminium with black coating Mineral wool 50mm thick on the back and 25mm thick on the sides covered with Aluminium foil. Glass rods, Aluminium nickel alloy Buy Buy Mild Steel, 2 coats Zinc Chromate Primer with 2 coats black enamel. With thermal insulation 15
The features of our solar water heater:? Highly efficient with excellent absorption (>93%) and minimum emittance(
The project in the first year is concentrated on Maharashtra region mainly concentrating on Pune and Mumbai. It includes market analysis, marketing strategies, organization structure financing and profit and loss account.
BUSINESS PLAN
HIGH EFFICIENCY SOLAR WATER HEATERS
8/31/2009
Executive summary
The project deals with establishment of a plant manufacturing greater than 93% efficient drainback evacuated-tube closed loop active solar water heaters (suited for weather conditions and water of India) of capacity 2000 L initially in first year and later diversifying into smaller capacity heaters. The project in the first year is concentrated on Maharashtra region mainly concentrating on Pune and Mumbai. The demand is huge as the market in India has huge potential because of strategic location. It is nascent with existing small players and unaware target audience. The expected demand in 1st year from residential complexes, hospitals, hotels and dormitories across Pune and Mumbai is expected to be 1050 units which will grow to 1260 units in 5th year on a conservative basis. The initial investment is expected to be 55818000 Rs. which will be financed by 20% equity and 80% debt from bank of Maharashtra subsidized at a rate of 2% for 6 years as a part of Government initiative because we are investing in renewable source of energy. The project is financially viable with IRR of 13% and break-even in five years with a conservative approach of growing 5% by the end of second year and 15% thereafter. The organization has 5 promoters having expertise in finance, marketing, R & D, production, HR respectively who will be contributing 20% initial investment. The organization will employ 60 employees including laborers, technician, clerks and supervisors. Vision: - To be an innovator in the non renewable energy sector and provide environment conscious products to the consumers. Mission:-The aim of the organization is to manufacture and supply high quality and cost effective solar water heater to consumers and provide value proposition to them in the form of excellent services and products.
1
Contents
Introduction to business concept ................................................................................................................. 3 Market Analysis............................................................................................................................................. 4 Marketing strategies ................................................................................................................................. 5 Target audience .................................................................................................................................... 5 Sales Plans ............................................................................................................................................. 8 Pricing Plans .......................................................................................................................................... 8 Promotion Strategy ............................................................................................................................... 9 Distribution ......................................................................................................................................... 14 Research and development ........................................................................................................................ 15 PRODUCT DESCRIPTION .......................................................................................................................... 16 Organization Structure................................................................................................................................ 17 Financing ..................................................................................................................................................... 18 Appendix ..................................................................................................................................................... 21 1.References ........................................................................................................................................... 21 2.Profit and Loss Account ....................................................................................................................... 22
2
Introduction to business concept
According to research report “Indian Solar Energy Market Outlook 2012” from a leading research company RNCOS, Solar energy offers enormous potential for a tropical country like India where around 45% of households, mainly rural ones, do not have access to electricity. India receives solar energy equivalent to more than 5,000 Trillion kWh per year, which is far more than its total annual energy consumption. The country’s geographical location, large population and government support are also assisting it to become one of the most rapidly emerging solar energy markets in the world. Consequently, the country is becoming a favorite investment destination for both local as well as global players. As the world is moving towards faster development, the energy needs are growing at an exponential pace. Majority of the conventional sources of energy like petrol, diesel, Electricity etc. are non renewable. Hence these resources are depleting day by day and the gravity of this energy crisis is further evidenced from the instances in the past where nations like Iran and Iraq have were drawn into wars to gain access to their energy reserves. In the wake of this, many developed and developing countries are looking towards the renewable sources of energy. India is also suffering from a severe energy crunch wherein the demands are endlessly succeeding the supply. Therefore, renewable energy sources can play a vital role in a developing country like India. Renewable energy (like the solar energy) technologies in India have been promoted through R&D, demonstration projects, dissemination projects/programmes supported by government subsidies and fiscal incentives. The contribution of renewable energy has not been significant n the overall energy scenario and thus it can be exploited to make a huge contribution in the Indian energy market. Solar energy accounts for less than a fraction of the total renewable energy installed capacity in India. The market of solar water heater is still untapped because of lack of awareness about the recent technological advances. One of the main reasons for this is the lack of adequate investment in solar PV manufacturing and R&D in India. Moreover people question the efficiency of solar heating devices. Many companies in India manufacture solar water heaters but these are not becoming popular in the domestic sector because of their high cost. To promote renewable eco friendly sources of energy, many States provide subsidies either on a lump sum or per unit basis to the users of solar heaters. There are also subsidized lending rates for purchasing a solar heater. India is the only country with a Ministry for Renewable Energy and a lot of initiatives are being taken for promotion of non conventional sources of energy. This would enable the domestic solar PV industry to provide cost-effective and sustainable solutions to the domestic market and compete with the rest of the world. Solar water heating system is a relatively mature solar thermal technology that has reached the stage of commercialization in India. Solar thermal technologies have a natural advantage in India due to the fact that the average radiation is 4.5–6 kWh/m2/day with an average of 280 clear days in a year. The technical potential has been estimated as 140 million sq.m. of collector area. More than 0.70 million sq.m. of collector area has been installed so far in the country for water heating which is less than 1% of the estimated potential. 3
Economics of SWHS is affected by the weather conditions. The ambient temperatures and the solar radiation together affect the amount of the auxiliary heating required. The economics have been found to be most effective for Pune, amongst all three cities selected, for all water usage patterns and capacities. The savings in electricity for Mumbai and Chennai are 80-90% and 70-82% of that in case of Pune, respectively. This difference in savings with location is due to difference in ambient temperature and insolation. We, a team of six MBA graduates from SCMHRD, have expertise in various fields of management and have therefore developed a business plan to invest in High efficiency solar water heaters which would enable us to tap this market which has not been utilized to its full potential and would help us carve a niche for ourselves before the market gets saturated. Our extensive R&D has helped us to develop high efficiency solar water heaters which would heat a gallon of water at a minimal cost of 10 paisa as opposed to the conventional method which costs around 65 paisa to heat the same amount of water. The electricity savings for the same would be 7000 Rs per annum. The technology is new and is not easy to obtain which would act as an entry barrier for the competitors. The capital intensive nature of the business would also act as a deterrent to the competition.
Market Analysis
Government has become Pro-environment and has already made it mandatory to have solar water heaters for the below types of buildings in NCR: ? ? ? ? ? ? ? Industries where hot water is required for processing Hospitals and Nursing homes including government hospitals Hotels, motels and banquet halls Large canteens Corporate buildings Residential buildings build in an area of more than 500 sq meters plot All government buildings, residential schools, educational institutes and tourism complex
The Government of Maharashtra has issued orders to urban local bodies to make solar water heaters mandatory in functional buildings. Moreover government has decided to make Maharashtra solar hub in the coming 5 years hence the same is very likely to be implemented here. The solar water heaters provided by Racold are the market leaders with a market share of 45% all over India. The scenario is not very different in Pune with all the leading builders and other commercial users preferring Racold’s water heaters. The rest of the market is shared by small local manufacturers who assemble the equipment and sell them for cheaper prices. Hence the market is very attractive and has a tremendous potential if customers are well educated and enticed by additional service and maintenance.We intend to capture a 25% market share in the next five years.
4
In order to reach our target market, we need to create a brand Solsys that creates the following perception in out customers: ? ? ? ? ? ? ? High efficiency systems Safe to use Cost effective Easy to maintain Reliable Robust User friendly
Present maket scenario(by value)
Local Manufacturer s 55%
Racold 45%
Marketing strategies
Target audience We shall target the entire state of Maharashtra in our initial stage beginning with Pune and Mumbai. Through our online presence though we have an advantage and capability to reach throughout India, we will concentrate in a lower area as we need to provide service support as well to our customers. The main drive behind each of these customers buying and installing solar water heaters were studied as following: Commercial Establishments: This population buys solar water heaters because ? It is mandated by the government to use solar water heaters in the establishment ? It is cost effective ? It will help attract environment conscious customers To attract his population, we have to offer low cost and high efficient solar water heaters to them. We need to promote the product as cheap and highly efficient. 5
The following establishments come under the commercial category: Hostels: There are 51 hostels in Pune and 75 hostels in Mumbai out of which ten are installed with Solar water heaters Hotels: There are 34 hotels in Pune which are suitable for establishing solar water heaters Hospitals: India is becoming a global destination for health tourism. As a part of this, Pune is also attracting a number of health tourists in addition to the general tourist population. Hence there are many corporate and multi specialty hospitals coming up in and around pune. As of now there are 23 corporate and multi specialty hospitals in and around Pune and 175 in Mumbai. All these hospitals will have to change to solar water heating systems when the regulation comes in to effect in Pune. Though this will be capital intensive for hospitals, the savings in the cost is attractive for them. We need to emphasize this point while promoting our product to this target population. Apartments: There are 64 upcoming apartments which are either under construction or yet to be constructed in Pune and more than 200 in Mumbai. Increasingly these buildings are using solar energy for heating water. Solar water heating facility is being mentioned in the brochures to promote their ventures. We need to pitch the following builders to promote our solar water heating plants: The upcoming ventures are by the following builders in Pune and Mumbai: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Manav Promoters K RAHEJA CORP Puranik Builders Rachana Associates Tejas Properties Bansal Infracon Aditya Builders Karan Group Soul Space Atlantis Omega Promoters Trikon Builders Kasturi Housing Bhandari Associates Shagun Developers Mahindra Lifespaces Concord Spaces Rachana Housing Development Co.Pvt.Ltd. Amar Builders Harshad Constructions Rama Group Queenstown, Chinchwad Bhujbal Construction Company 6
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Sanjay Developers G. K. Developers Venkateshwara Amit Enterprises Park Royale Kolte Patil Developers A. V. Bhat & Co. Goel Ganga Developments M/s. Bhujbal Brothers Construction Co. 5 Star Constructions Lunawat Landmarks Nyati Group Vilas Javdekar & Associates Sonigara Homes Deshpande Builders Wadhwani Construction Pratham Yash Promoters & Builders Gokhale Builders Promoters & Developers Marvel Realtors
Industrial: Pune has got many industries in and around it. Pune has become an automobile hub of the country. It has got many blue chip companies like ? ? ? ? ? ? Bajaj Auto Tata Motors Bharat Forge Daimler Chrysler Mahindra Kinetic Motors
In addition to these automobile industries Pune has become the IT hub of Maharashtra. Pune has got the highest number of IT employees after Bangalore in India. The IT companies operating out of Pune are numerous, to mention a few of them: ? ? ? ? ? ? TCS Infosys Wipro Technologies Cognizant Technologies Amdocs Syntel 7
? Satyam etc.. All these are infrastructure intensive in nature and require high efficient solar water heaters to satisfy their hot water requirements under the above directive by the government.We would provide these industries with energy efficient, low cost solar water heating systems. Household: Households have the following incentives for using our water heaters: 1) They are lower in cost when compared to a geyser 2) Low maintenance costs 3) Electricity savings 4) Environment friendly The profile of a family that would use our water heaters would look like below: ? A nuclear family with mother, father and to children ? Average annual income of 3 lakh rupees and more ? Average age of the family is between 20-25 Sales Plans ? We will target promoters of apartments in Pune first ? We will approach banks who would provide financial succor to developers who are willing to promote the usage of solar water heaters ? Government provides support to green projects along with tax concessions ? In the next two years, we would target corporates ? The last phase of out target will be households with smaller capacity solar water heaters. Pricing Plans We would be selling our product at a price of Rs 200000 per unit. According to the Delhi Govt.’s report the selling price by the local manufacturers is around Rs 260000. This gives us a huge cost advantage over our competitors. Initially, the pricing will be done on a cost plus basis(penetrative strategy). As there is little competition in this segment of the market, we can price our product a bit higher and recover a part of the cost as subsidy from the government. According to the concept of shadow pricing, if the society at large is getting higher benefits that what it expends on the product, and then project becomes self sustainable. The shadow benefits are through tax and interest subsidies provided by governments to the customers if they buy solar water heater.
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Promotion Strategy The major aspect of the promotion of the high efficiency water heater would emphasize on highlighting the benefits and environmental implications of the product to the builders in the first phase since we attempt to attract this segment in the first phase of our project implementation. Our aim would be to deliver “One voice, one message” to the builders by addressing their top concerns, including brand name recognition, cost efficiency and the consumer demand. Our Promotional effort would encompass the following: ? Persistent PR campaigns to promote awareness among the builders. ? Forging of alliances with the suppliers of the raw material required that are required for the product. ? Providing valid case studies or demonstration communities that support energy claims and showcase consumer acceptance. ? Full advantage of the government sponsored programs. ? Participation in builder associations. ? Participation in trade shows in the target markets. ? Advertising to builders and architects in their trade publications. ? Technical and design support to builders, installers, utilities and architects. ? Promotional materials made available to builders for their sales offices. ? Sales training for builder sales staff and design center staff.
Our business plan would target the builders in the first phase and as our business gains momentum we would expand to the domestic segment. Thus, our initial strategy would be to create awareness about our product and attract the major builders in Pune and Maharashtra and to procure mass orders. The estimated timeline for the same can be presented as follows: EVENTS PR Campaigning Alliance with the suppliers Participation in Trade Shows Participation in Builder Association Advertisement in Trade publications Demonstration Government Sponsorship Technical and design support Sales Training Promotional offer 0 PROPOSED TIMELINE(weeks) 6
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? The PR campaigning forms the backbone of an effective marketing strategy and thus our emphasis would be laid on it as well. Creating press releases for distribution in local publications, including newspapers and magazines, announcing new solar communities will be a central part of this endeavour. Internet Advertisements would also be used. The information given out would be the price, usage, environmental application, safety, ease, warranty and benefits of the product. (The list of the initial targeted builders and the Print Media to be targeted is listed at the end of this segment.) ? Strong alliances with manufacturers and additional trades would also prove to be a profitable proposition here since this can help us to promote energy efficient packages as a method of product differentiation and niche marketing for builders. In the future this alliance would also help us when we expand our market to the domestic segment. ? The ability to illustrate product acceptance and efficiency with case study examples or referrals to existing new home communities will strengthen the presentation to the builder. With additional valid evidence to support industry claims, builders will be encouraged to seriously consider energy efficient packages and solar water heaters. ? Participation in building trade associations will show dedication to the industry and increase exposure to the market. Regular advertising in trade publications will increase awareness. Participation in major building industry trade shows and at smaller, regionally important trade shows will also contribute to building awareness within the industry. This would also act as a tool to identify the desiring customers. ? Creating a point-of-purchase display to draw the builder’s attention to the presence and effectiveness of solar water heating will also serve as an additional sales tool and support the efforts of the on-site agent. ? Creating training materials which allow the on-site sales agent to accurately portray the benefits of solar water heaters, along with the other features would also be incorporated. This effort is key to enlisting their support and assisting them in properly representing the builder’s homes. The Training material would be simple and the message would be clear and distinct. ? We also plan to have a customer care centre wherein we would initially hire 2-3 employees who would answer the queries raised by the prospective customers regarding the various features of the product. This would also help us in raising awareness about the product and would help us establish superior servicing standards. ? Buy- in of the government would also be an important strategy as the government supports such initiatives of energy conservation and provides subsidized loans and discounts on the purchase of products like solar water heaters. In addition, it also gives the provision of tax evasion to the users. A full advantage of this fact would be taken during the advertising and promotion to attract target audience. 10
? Sponsorship for the expenditure on the advertisement and promotion of the product can be arranged from government institutions, Trade Associations, and Public Utility companies. An alliance with these would also help us gain the confidence of the builders. Promotion Chart:
CUSTOMER
SALES
INSTALLATION
CUSTOMER SERVICE CENTRE
PROMOTION IN MUNICIPALITY
Sales and installation
PROMOTION IN PRINT MEDIA Customer centre and marketing
Since many customers are not crystal clear about the various facets of the solar heater and its added benefits we propose to have a customer service centre which would help raise the awareness about the world wherein our employees would answer the queries of the builders regarding the product, its features, its benefits, installation, maintenance, services provided by us, etc. The interest created by the customer centre would be diligently followed up by sales and installation services. This would also enhance our authority in establishing a qualified product portfolio.
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List of Targeted Builders: ? ? ? ? ? ? ? Regus Group Naiknavare Developers Pvt Ltd Mahindra Lifespace Developers Hiranandani Developers Nahar Group Raheja Builders Ajmera Group of builders
List of Targeted Newspapers: ? ? ? ? ? ? Sakal Times Dainik Kesari Navbharata Times Times of India Bombay Times Maharashtra Times
List of targeted Websites: ? makaan.com ? Bestbuildersindia.com ? Punesite.com List of targeted Magazines: ? India today ? Catalogs ? Maayboli Targeted Trade Associations: ? Promoters & Builders Association Of Pune ? The Bombay Custom House Agents Association
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Distribution Our factory will be situated at Chakan in Pune. We will build solar systems according to the orders received. We would store minimum inventory and our cash to cash cycle will also be short. We will do sales using the following tools: 1) Online: We will have an online presence. In addition to having our own website, e would be present in online sites like alibaba.com, e-bay etc… and put our quotes on the web. Thus we can collect orders online. In these cases, the customers will pay online using credit cards 2) Through Sales Force: Our Sales representatives would directly contact the customers and take direct orders from them. Our call centre executives would first contact our potential customers and arrange for a sales demo with the representatives at their place. Our sales representatives would go and collect the sales orders from these people Due to the above distribution strategy our channel would look like below: Online sales:-
Customer
Sales through Sales Force
Web Portal
Solsys
Customer
Sales Representative
Solsys
Advantages of our distribution Strategy:
1) We will have fewer inventories. This will help us to save costs. Hence this would become a competitive advantage 2) We will be able to collect our cash from our customers before we actually start manufacturing for them. Hence we will have a cash advantage and the debtors will be very low 3) Since we are building to the order of our customers, we can give them customized solutions. This will be another competitive advantage for us. 14
Research and development
A solar water heater consists of a collector to collect solar energy and an insulated storage tank to store hot water. They can be used in any climate, and the fuel they use—sunshine—is free. There are basically two types of solar heaters. Active which are more efficient as compared to passive solar water heaters but need more maintenance. Passive which are less efficient as compared to active solar water heaters but need less maintenance and have long life. Three types of solar collectors are used for residential applications:
? ? ?
Flat-plate collector Integral collector-storage systems Evacuated-tube solar collectors
Since we are focusing on high efficiency and targeting builders mainly in Pune, we will be manufacturing active solar water heaters. Active solar water heaters are of two types:Open loop:- Open-loop active systems use pumps to circulate household water through the collectors. This design is efficient and lowers operating costs but is not appropriate if your water is hard or acidic because scale and corrosion quickly disable the system. Closed loop:- These systems pump heat-transfer fluids (usually a glycol-water antifreeze mixture) through collectors. Heat exchangers transfer the heat from the fluid to the household water stored in the tanks. Double-walled heat exchangers prevent contamination of household water. Since water in Pune is hard we will be manufacturing Drainback active closed loop solar water heater using evacuated-tube solar collectors since these collectors are best for domestic applications requiring very hot water and direct current (DC) pumps powered by small solar-electric (photovoltaic, or PV) panels which will not need any cost since they will be powered by solar energy. Raw materials required for Active closed loop solar water heater with evacuated-tube solar collectors:Component COLLECTOR BOX STORAGE TANK THERMAL INSULATION EVACUATED-TUBE COLLECTOR PUMP PHOTOVOLTAIC CELLS SUPPORTS FOR TANK AND COLLECTOR PIPES Raw materials Aluminium, aluminium magnesium alloy for corrosion resistance Copper and Aluminium with black coating Mineral wool 50mm thick on the back and 25mm thick on the sides covered with Aluminium foil. Glass rods, Aluminium nickel alloy Buy Buy Mild Steel, 2 coats Zinc Chromate Primer with 2 coats black enamel. With thermal insulation 15
The features of our solar water heater:? Highly efficient with excellent absorption (>93%) and minimum emittance(