Revised Nov.

11

FROM A CLEAN SLATE: M/s SOLEX [A]

On April 1, 2008, you received a letter from your MD. The letter stated: "We have decided to enter into the area of solar water heaters. The global energy crises and the environmental concerns have made the dependence on non-conventional and renewal sources of energy an unavoidable imperative. With several sunny days, solar energy holds a special promise and potential in India. Solar energy based water heaters appear to be a natural extension of our existing business lines in energy and environment protection. Acquisition of M/s Solex, a small Nasik-based firm, marks our entry into this business. SOLEX has capabilities to manufacture both large and small (domestic) solar water heater systems. These can be sold to households as well as to big organizations. As of March 31, 2008, the paidup capital of SOLEX was Rs.2 millions. The accumulated losses in the last five years were around Rs.10 millions." The letter further stated: "The management is pleased to appoint you as General Manager (Solar Energy Division). As GM, your first task is to put back M/s SOLEX on smooth rails. You are required to develop a marketing plan for 2009-10. Your sales target in the first year should be Rs.10 million. You have complete liberty to develop your own budget for the sales promotion. Management assures you of adequate manpower and funds. You are requested to submit your plans within 30 days. I am enclosing some important information. You may find it useful."

M/s SOLEX: SOME INFORMATION 1. .2. The existing capacity of M/s SOLEX to manufacture the collectors is around 18,000 sq meter a year, on a three-shift basis. The factory cost of fabricating the collectors, varies from Rs.2400 to Rs.3600 sq meter. The cost depends upon design and material used for the collectors. Collectors using galvanized iron (GI) pipes or mild steel (MS) pipes are cheaper and less efficient, than those using copper pipes. The approximate cost of a collector in the total installation of a system may be around 60% The existing domestic models of solar water heaters of M/s SOLEX are:

3. 4.

a. 75 liters (capacity of storage tank, useful for five people). This requires 1.2 sq meter of collector
area. Depending upon the material of the pipes, the sales price may vary from Rs.4000 to Rs.6000 per unit. ---------------------

This case has been prepared by Dr. Sharad Sarin,Professor, Marketing and Strategic Management Area, Xavier Labour Relations Institute, Jamshedpur, India. It is intended as a basis for class discussion rather than to illustrate either the correct or incorrect handling of business situations. b. 125 liters, useful for 6-7 people. It requires 2 sq meter of collector area. The sales price may be Rs.8000 to Rs.12,000 per unit. c .250 liters, useful for 12-15 people. It requires 4 sq meter of collector area. The sales price may be Rs.9000 to Rs.12,000 per unit. 5. M/s SOLEX has supplied, erected and commissioned a system capable of supplying 6500 liters an hour of hot water at 65 C to a leading hotel in Delhi. This system was designed for a temperature rise of 35 C. The hotel has around 500 rooms and the total cost of the project was around Rs.2 millions (2007). The use was for pre-heating the utility water as well as a large swimming pool.

6. Approximate heat available for a temperature rise of 35 C, assuming collection of 6 hours a day of solar energy, works out to be 524.4 kilo calories an hour per square meter of collector area. The normal temperature of water could be considered as 30 C.

7.

As per market study, the estimated potential for various user segments in India are: User Segments Potential in rupees at 2008 Prices [only for collector area] Rs.200 millions Rs.40 millions Rs.600 millions Rs.100 millions Rs.3000 millions

a. Hotels b. Hostels in universities and colleges c. Bottling plants d. Canteens of manufacturing sector e. Domestic hot water solar heaters

8.

By 2008, there were around 20 firms in India, who were claiming to be in the business of solar water heaters. These were mainly located in the metro cities.

END NOTES/SUGGESTIONS

Identify the feasible marketing possibility in terms of overall business strategy and STP.