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GLOBAL POWER SOLUTIONS


U.VIKHNESH, S.ASWIN 12, PRINCE ROAD VADAPALANI CHENNAI 9566144921, 9994785730

BUSINESS PLAN GLOBAL POWER SOLUTIONS NAME OF PARTICIPANTS: INSTITUTION NAME: U.VIKHNESH, S.ASWIN SSN SCHOOL OF MANAGEMENT AND COMPUTER APPLICATION, SSNCE MBA 1ST YEAR

DEGREE / COURSE:

E-MAIL ID: CONTACT NUMBER:

vikhnesh@gmail.com, aswinsmails@gmail.com 9566144921, 9994785730

Executive Summaries

Introduction The GLOBAL POWER SOLUTIONS is a Chennai based company deals with supply of solar photovoltaic (PV) modules in India. These PV modules are widely used to harness solar energy for electricity generation. The company will initially import PV modules from china, Germany and Spain and has a plan to set up the production unit once the initial phase of learning curve is successfully completed. The reason for the emergence of this company is described as follows. Clean Energy Sector Indias GPD grows at 8% and it aspires for double digit growth rate. In this scenario, energy becomes an important for rapid economic growth. The electricity generation in India is almost dirty with approximates 64% comes from thermal energy. The electricity generation contributes to about 36% of the GHG emissions in the country as per MOEF report 2010.National action plan on climate change has been launched by the prime minister to combat climate change with the CO2 emission reduction of 20-25%.Under this plan government has given thrust on clean energy sector with huge deployment of the clean energy sources across the country. Hence it is the wisest choice to make the investment in this sector.

Fig 1: Energy Mix of India Reason for the use of Solar Energy Electricity has become one of the compulsory components in every human life. The major component for power (Electricity) generation is coal. But it is exhaustible. Thus there will be a shortage of powers after few decades. And in India especially in rural areas there is a maximum power failure, and it may be one of the reasons which affect Agriculture. Past 10 years, Indias power supply-demand gap has averaged 8-10%. National Electricity Policy aims at an availability of 1000kWh per-capita, per year, by 2012. This shows that additional energy of 450 billion kWh have to be made available in that time. So the efficient way for power generation is to use the renewable resources. The solar energy tops as the renewable resources in power generation.

One hour of sunshine on our planet, if stored adequately, can meet the global needs for an entire year. This is the potential of solar Energy. Under the national action plan on climate change, Government of India announced Jawaharlal Nehru National solar Mission which has the target of 20,000MW by 2022 in India with almost 50% of it being solar PV. Moreover, India is abundantly blessed with solar radiation of 4-5kWh/sqm approximately 320 days a year. Photovoltaic (PV) power systems convert sunlight directly into electricity. A residential PV power system enables a homeowner to generate some or all of their daily electrical energy demand on their own roof, exchanging daytime excess power for future energy needs (i.e. nighttime usage). The house remains connected to the electric utility at all times, so any power needed above what the solar system can produce is simply drawn from the utility. PV systems can also include battery backup or uninterruptible power supply (UPS) capability to operate selected circuits in the residence for hours or days during a utility outage. This business plans finds a great demand in marketing, creating jobs and increasing opportunities for customer savings and their satisfaction. This business is first done in small scale, later it will be converted into larger scale. The below graph shows the amount of power among various renewable resources and this use of energy has been forecasted up to 2100.

Fig 2: Exemplary path, global primary energy Products/Services Offering Initially, this company estimates the amount of roof area needed, which also depends on the PV modules efficiency in converting sunlight to electricity. Since the area for PV module is directly proportional to production of watt. Then, the company offers products such as PV modules, a battery backup or an UPS and other accessories to the customers along with installation. Also, we provide proper services to the customer.

Target Market The company supplies the PV modules for decentralized electrification. So the primary customers to be targeted in this market are Building Contractors, education institutions, MNCs which has an rapid increase by numbers, in recent years and also to the residence (includes apartments) that are existing. The prime customer is Building Contractors who can provide sales to us for their future projects. Thus they can attract the customer by adding this service as one of the features (power saving). If it is in case of apartments or in cooperate offices or in educational institution or in large industries or factories then the cost of product and its maintenance will be shared by the respective member who is cheaper, that brings more customer satisfaction. In this market we have very less competitor in Chennai; the way to achieve in this market is easy and simple. The next step is to approach the government when there is any tender noticification related to our business or by approaching them directly and producing a report with an estimation to supply our products for rural areas and also used in government owned places such as bus stops, street lights and many more. The two reasons for which there will be a good opportunity for the steady growth of our business are

generation

Low Electricity bills, which leads to customer satisfaction Backups or UPS are used for future power saving The government policies and regulation on this power

The application of PV modules and the percentage it is used are

Source: MNRE Annual report 2007-08 Fig 3: cumulative PV module production in India and application (in MWp) In this business. Initially we would take the order and then import the required amount of PV modules in bulk and the workers from our organization would install the setup in the given location. Mission To provide better Quality and Price the service so that there is a good profit margin while remaining competitive, also to make the customer be good. Vision To be the global leader in production and supply of PV modules. Short Term Goals The short term objective of the company is to attain a good relationship with customers including contractors and government officials. The company should provide good quality of materials, proper installation and services to customers. The profit is kept low in order to attract the customers from other competitors. Long Term Goals The long term goal of the company is to supply product and services all over India by starting few production units at respective locations and to export the products to other countries. Obtain a brand image of the company among the customers. Management Teams The company is a small scale and thus the management team is also very small in group. The companys CEO is Mr.U.VIKHNESH. The MANAGING DIRECTORS is Mr. VINOD. The Sr. MANAGERS are Mr. RAJESH

& Mr. GOWTHAM. The Chief Accountant is Mr. GUNA. The Chief marketing and sales officer is Mr. RAM. The chief customer care and service officer is Mr. RAJU.

Benefits to the Community Economic Development The jobs in this market is quiet secured, since it is an renewable energy industry and the whole global depends on this industry in future, which increases the demand on this product . It has a high probability of getting expanded throughout the world. The demand for this market increases and it would not result in resentment to customers. Also it provides high opportunities for the suppliers and to the dealers, who help in marketing our products. And this is the one of the industry which provides you the steady growth of profit in present and future world. So the suppliers and service providers will get benefited from this industry. However power generation capacity with estimate in the region of 100MWp with grid connected solar PV generation at a mere 2.12MWp. Community Development Initially there will be a slow progress in the demand, after the awareness about the renewable resources and better economic condition among the people the demand will increase. Later more than sixty percent of city population starts using it. In future this may be used as a source as well as power saver package for industries, education institution and many more places. This product is an ecofriendly, which adds a great advantage to the society. Human Resources Development In many country like US today directly employs 20,000 people and indirectly supports 100,000 jobs. The figure are expected to rise to150,000 by 2020 equally employment in the US glass industry. Similarly, in India the robust and expanding industry will create job right across the value chain-from specialized high paying, high technology sector in R&D, to employment for manufacturing workers, technician and many more. A senior officer in MNRE estimate a 100,000 jobs in PV by 2020.industry sources suggest that if all the job linkages are considered, PV jobs in India could far exceed their figure.

Company Analysis Form of Business Ownership Initially this is a small scale industry, so the company runs in a sole proprietorship. But after transformation of company into large scale industry the partnerships are included. This is carried as an independent business. The license and

permits obtained are pollution control clearance, land zoning clearance, local permission, power evacuation facilities, and safety control. Industry Analysis This industry operates in the power generation sectors, where there are negligible competitors in local markets, and very less competitors in national and global markets. This PV Module manufacturing capacity in India could see dramatic growth. This provides an equal growth and opportunity to the manufacturing industry, which produces charge controllers, inventers and battery system. Initially the company will be moving with less profit, but once the product in the market finds a way, then there will be good progress in the profit. At the beginning we are trying to spend more money in marketing in order to achieve customers through any means especially big and long time customers. This will be even found as an online business from initial. Manufacturing and Operations Plan Location and Space Requirements The office is located at Vadapalani, whereas the godown is located in maduraivayol, this area has been well connected to a bypass road which make an easy move towards port and also connect to trichy and Bangalore highway. Thus this will make an efficient cost control management in logistics. But later when company turns into big scale industry the production unit will be shifted near thiruvallur such that it is well connected to other major cities through roadways and railways. And also it is just a couple of hours from port. The spacing required for the small scale industry is very less (just a closed godown in five grounds and an empty ground of around 500sq ft on each sides of that godown), but for a manufacturing unit we requires around one fifty hectares of land, which can be brought by companys principle amount. Thus we first buy land for that small scale industry and then when the required amount is obtained then we sell the land and added along with the amount to buy land for large scale industry. Equipment The main and important machineries will be purchased only for the large scale industry, since the small scale industry deals as an purchase of goods, assemble and sales of goods and also to provide services. Labor Force The labors are paid as per the regulation of payment of wages act, 1936 and bonus and other benefits are provided to the person who puts the company into profit. There are skilled labor available in Chennai, than searching in other areas, since the company is new to this market, in order to avoid strikes, layoff and turnovers the contract between bond/contract will be made clear and relevant.

Inventory Control There is a separate department for inventory and quality control which will be directed by CEO of company when it is a small scale industry but when it turned as a large scale industry these separated departments are maintained by the directors appointed by the CEO of this company. During small scale industry, the inventories are purchased more than the customers orders. This helps in replacement of goods, if any of it found faulty. Thus we maintain the proper time management in supplying products to costumers. But during large scale industry we have quality control department, which will meet the required standard of the product to the customer. Labor Force Labor Requirements The labors are required less in the small scale industry from which few skilled men are required in particular department and the qualification we are recruiting the labors who are skilled posses a bachelor degree in their respective field whereas in case of large scale industry we are looking for huge number of skilled persons. The job description are been provided by in written format at the time of recruitment. The wages will be quiet less compared to other industry at the initial stage. But that will raise up after making profit maximization and also obtaining the brand image of the company. Thus the company mainly depends on the efficient labor force and the marketing technique. Selection, Orientation, and Training At initial stage, that is at small scale industry the company will recruit the person by the experts working within the company and when it is transformed into the large scale industry the company will hand over the recruitment process to the consultancy where they will recruit and train the people for which the payment for them will be received from the company. And the company will put a contract those who have been selected to work in this company for 2-3years. If they break the bond, then they will have to pay an amount of Rs 100000/- to the company. Evaluation, Policies, and Rules At initial level the evaluation is coordinated by the senior HR staff. But at the time when the company transformed into large scale industry, the employee will be evaluated by their superior officer and this evaluation is verified by the senior staffs in HR dept regularly. All the authority in the company will provide good delegation to the entire worker at any time. The company follows basic disciplines which other company does so, but here the discipline is maintained in friendly manner rather than in a rude way. When the employees contract gets over or if he breaks the bonds, at that time the HR department will look after the process to avoid the break in work. It is done so by taking regular updates of the availability of employees in the job portals and tackling the situation with the other employees by doing overtime such that this process

will be of shorter period and these rules will be mention to the employees in their contract. Marketing Plan

Fig 4: Global PV market, modules

Fig 5: The installation of PV module during 2003 among various countries is shown below

Target Market(s) The first way to market the product at the initial position is to go with advertisements. In parallel, the person from this company will approach to every customers (builders, educational institutions, cooperate companies). This marketing strategy will be initiated in Chennai. And if it finds an improvement, then this technique is used to supply to the customer of other cities, or else we find another solution. Once the customers are focused, we have to attract them by using proper marketing techniques which includes advertisement, door to door sales etc and then we have to retain them. Once customer retention are made, then there will bean slight improvement in marketing the product, and this customer retention will even make popularize our product and its brand image. As mentioned we are trying to expand in marketing this product in rural areas mainly for agriculture and respective people with the help of government. There is a slight drop in marketing the product at its initial stage and this may be one of the drawbacks in this business. Environment In India, the economy is quiet good and there is a steady growth in recent years. Thus it has improved the standard of living which in turns results in turning luxurious needs into basic needs. In this business the government has provided various assistance and allocated funds to use of efficient use of renewable resources. In todays world the technology goes wider along with innovation and this also have an influence in this business in future.

Marketing Objectives As said earlier the company will market with the help of advertisements, and also with CRM. The company may even move with the help of share markets. The share value and its moment are monitored by the CFO of this company. But this share market are used for the expansion and development of the business, incase the share holders overall applied to get their share amount then the company may get back into its initial position or may even wind up certain branches which produces small profit and growth. This company will not wind up under any circumstances. After few years, the company may get wider its branches throughout India. Every couple of months before the financial year ends a market report has to be submitted by the marketing dept to all other senior persons of management in that company such that it will help us to make an increase in profit.

Financial Plan To initiate the company we have to invest huge amount into this business. This may involves around 50-60 lakhs in terms of other expenses which includes assets. The balance sheet is provided below. This calculation is based on assumption but the range may differ in little percentage only. The minimum average

estimated profit made is about five to six lakhs per annum. The estimated payback period is about six to seven years. The return on assert is about 12 percent PAYBACK PERIOD: OTHER COST 2200 1200 600 1000 2500 2500 3000 13000

Man power Maintenance Telephone Admin Marketing Travel Miscellaneous Total

PAYBACK PERIOD CALCULATION: INCOME CONSUMABLE COSTS OTHER COSTS (13,000X12) Profit subsidy (10%) PROFIT AFTER SUBSIDY Add DEPRECIATION (assumed as 1.5% on fixed assets) Cash flow Initial investment including Working capital PAY BACK PERIOD 4,00,000 20,000 1,56,000 2,24,000 22,400 2,46,400 64,500 3,10,900 20,00,000 20,00,000/3,10,900 = 6.43 YEARS

BALANCE SHEET OF GLOBAL POWER SOLUTIONS


ASSETS Current Assets: Cash-in-hand Cash at bank Debtors (Accounts receivable) Bills receivable (Notes receivable) Stock in trade (Inventory) Total Current Assets Fixed Assets: Furniture and fittings Buildings Plant and machinery Land Total Fixed Assets Total Assets Liabilities: Current Liabilities: Creditors (Accounts payable) Bills payable (Notes payable) Bank overdraft Total Current Liabilities Fixed Liabilities: Long terms loans Owner's capital Add net income for the year

2,06,000 1,19,000 3,00,000

6,25,000
4,00,000 13,00,000 7,00,000

19,00,000 43,00,000
49,25,000

20,00,000 -

20,00,000
9,25,000 20,00,000 ---------

29,25,000
Total Liabilities and Capital 49,25,000

Trading and Profit and Loss Account/Income Statement Income From Sales: Sales Less: Sales returns Sales discount Net Sales Cost of Goods Sold: Purchases Less: Purchases returns Net purchases

7,00,000 7,00,000

3,00,000 -

3,00,000
4,00,000

GROSS PROFIT Operating Expenses: Selling Expenses: Sales salaries Advertising expenses Insurance expense selling Store supplies expenses Sundry selling expenses Total selling expenses General Expenses: Office salaries Taxes Insurance expenses general Office supplies expenses Sundry general expenses Total general expenses Total operating expenses Net profit from operations Other Income: Rent income Other Expenses: Interest expenses

20,000 12,000 10,000 13,000 5,000

60,000
23,000 10,000 15,000 58,000 1,18,000 ------

-----NET PROFIT 2,82,000

Exit Strategy As an entrepreneur, we would like to move with the business and not to wind up. Incase if that situation occur. we would go with the merger and acquisition of my company, which has good brand image, so that the shareholders will have a drop in share value and may get increase in that value after period of time. But it wont make them loose their overall money. Incase the company gets windup then as per the rule the shareholder gets the money by selling the asset of the company. Critical Risks and Assumptions If the market develops slowly, we have to identify in customer point of view as what factor influences the slow growth and similarly we have to be in good relationship with suppliers such that we can market under the time of demand. If there is competitor in business, it will get our product more quality and better. And also adds support and makes important about the product in general to public. Thus we have to be keen on the competitor such that if they introduce any concept then we have to benchmark it and reproduce those ideas in better way. If the company found that it cannot turn into large scale industry, then we have to start similar small scale industry in major regions of India, and thus this may help in constituting a big scale industry.