Professional Documents
Culture Documents
MBA-RM 2010-12
(MANAGEMENT TRAINEESHIP SEGMENT-II REPORT SUBMITTED FOR PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE MASTER IN BUSINESS ADMINISTRATION ON RURAL MANAGEMENT)
HOST ORGANIZATION
MTS-II CO-ORDINATOR
Urja Unlimited
REPORTING OFFICER
FACULTY GUIDE
Acknowledgement
First and foremost, I am thankful to Prof. (Dr.) L. K. Vaswani, DIRECTOR, KIIT School of Rural Management for placing the Management Traineeship Segment-II (MTS-II) component as a part of our course curricula. I would like to express our gratitude to Professor (Dr.) Prasun Kumar Das, Coordinator, MTS-II to facilitate throughout by playing different roles as mentor, coordinator and supervisor and for inputs and moral support for designing and completion of the report. I am thankful to the faculty guide Prof. Prasanta Parida for his guidance and assessment of this report. Prof. Prasanta Parida inspired me greatly to work in this project. His willingness to motivate me contributed tremendously to my project. I also would like to thank him for referring to me examples that related to the topic of my project. My heartfelt gratitude goes out to my reporting officer Mr. Shiv Shakti Kumar for giving me an opportunity to conduct research on such an important topic as Market Research for the launch of Solar Tube Light under Hawkers Lighting Program. He worked as a mentor and guide and provided valuable inputs and leadership in every stage of my research. Besides, I would like to thank my colleague in the project Mr. Alok Pandey, whose valuable inputs contributed immensely towards successful completion of this report. In order to complete fieldwork successfully, I would like to present special thanks to all the research participants and hawkers who provided their valuable time and made our stay meaningful and study valuable. Finally, an honorable mention goes to my parents, Mr. Swapan Kumar Auddy and Mrs. Mallika Auddy for their understanding and support to me in completing this report. Without the help and continued support of the above-mentioned people this report would not have seen the light of the day. I am also extremely happy to reveal my special thanks to Mr. Debabrata Chakraborty, Mrs. Dona Chakraborty, Mr. Deepak Khokhar, Mr. Jai Prakash and Mr. Chirag Singhal and my classmates for their moral support and inspiration. -Soumyajit Auddy(10201053)
Executive Summary The title of the project is Launch of Solar Tube Light under Hawkers Lighting Program conducted by Soumyajit Auddy, student of KIIT School of Rural Management, in the host organization Urja Unlimited, in the Faridabad district of Haryana. The research was done to assess the best plan for the launch of solar tube light under Hawkers Lighting Program in the Faridabad region. The objectives of the Hawkers Lighting Program are: To provide clean lighting solutions to hawkers Reduce health hazards which results from inhalation of obnoxious fumes as a result of using kerosene or Petromax lamps Provide livelihood opportunities to hawkers and increase their income Reduce environmental pollution
Urja Unlimited is working on a strategy to launch two of its products, namely solar tube light and solar lantern in the Faridabad district having the street vendors and hawkers as its customer base. The project was done to assess the feasibility of three plans namely, the full payment scheme, the installment scheme and the bank linkage scheme and to position and launch the product in one of the above mentioned three plan segments which is the most appropriate.
The methodologies followed for this research are enumerated in the following points: Firstly, a structured questionnaire was designed with the objective of doing a market survey to understand the needs of the target consumers of the product. Secondly, promotion of the solar lantern and tube light was done through the distribution of flyers and posters among the hawkers and vendors of Faridabad district. The aim was to target as many number of hawkers and vendors in Faridabad district as possible. The findings of the research are listed below: Robust advertising and promotion of the product is needed to capture market and consolidate market share being the first product of its kind in the market. Pricing needs to be re-worked since most consumers find price of the product to be exorbitant.
Brand promotion activities need to be undertaken to increase brand value of the product. Hawkers need to be brought on a common platform and hawker groups need to be formed. These groups will then be linked with banks that will provide them with micro loans for purchase of the lighting solutions. In this way the cost of recovery of installments and the risk of installments can be curtailed. The formation of hawkers groups or hawkers SHGs will be formed in the following pattern.
Contents
CHAPTER I- INTRODUCTION BACKGROUND OF SOLAR ENERGY IN INDIA URJA UNLIMITED- HAWKERS LIGHTING PROGRAM OBJECTIVES OF THE HAWKERS LIGHTING PROGRAM CHAPTER 2- ORGANIZATION PROFILE HAWKERS LIGHTING PROGRAM COMMUNITY SOLAR STREET LIGHTING PROGRAM LIVELIHOOD AND ENTREPRENEURSHIP ASSURANCE PROGRAM CENTRE URJA UNNATI PROGRAM TRAINING PROGRAMS ON SOLAR ENERGY CHAPTER 3- METHODOLOGY CRITERIA FOR SELECTING THE VENDOR LIMITATIONS FACED DURING SURVEY CHAPTER 4- DATA INTERPRETATION AND ANALYSIS ANALYSIS OF THE SURVEYED DATA TECHNICAL SPECIFICATIONS OF SOLAR TUBE LIGHT CUSTOMER NEEDS REPAYMENT PLANS UNIQUE SELLING PROPOSITION OF SOLAR TUBE LIGHT SWOT ANALYSIS COMPETITION SITUATION PORTERS FIVE FORCES ANALYSIS SALES OBJECTIVES BENEFITS OF USING SOLAR TUBE LIGHT FOR HAWKERS RECOMMENDATIONS FRAMEWORK FOR HAWKER SHGS CONCLUSION CHAPTER 5- BIBLIOGRAPHY 1 1 3 3 4 5 5 5 6 6 7 7 8 9 9 12 13 15 17 18 19 20 22 22 23 23 25 25
Chapter I- Introduction
Background of Solar Energy in India
The Indian solar energy sector has been growing rapidly, in the past few years, majorly due to Government's initiatives such as tax exemptions and subsidies and depleting energy sources. 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 percent of the total installed renewable energy of India. 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 renewable and the balance is the gas and nuclearbased. 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 cost of production range is Rs 15 to Rs 20 per unit for the solar energy, which is very high when compared to, Rs 2 to Rs 5 per unit for other conventional sources in India. Much of the country does not have an electrical grid, so solar power will indeed be a boon for water pumping, to begin replacing India's four to five million diesel powered water pumps, each consuming about 3.5 kilowatt of off-grid lighting. Solar energy technology consists of solar thermal technologies, which utilize sun's energy and solar photovoltaic technology, which convert solar energy directly into electricity. According to the 11th five year plan, the government of India projects a massive expansion in installed solar capacity, and aims to reduce the price of electricity generated from solar energy, to match that from fossil fuels like coal and diesel by 2030. The Integrated Energy Policy of India envisages electricity generation installed capacity of 80, 0000 MW by 2030 and a substantial contribution would be from renewable energy. India has been ranked 7th worldwide for solar photovoltaic (PV) cell production and 9th rank in solar thermal power generation. This capacity is growing rapidly due to the entry of various private players in manufacturing of solar energy equipment. The Indian solar energy sector is estimated to grow at 25% year on year in next few years. At this rate, the global market is likely to exceed the annual production mark of 12 GW during the year 2012. Likewise, the Indian market demand is expected to reach 200MW by the year 2012. The implementation of the three-phase plan for solar PV capacity expansion is expected to begin
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this year in 2010, with the Indian Government spending approximately US$20 billion over a 30 year period. As renewable energy source, solar energy presents an exciting opportunity. While the current contribution of solar energy to the total global energy needs is insignificant, in the medium and long run, it is expected that solar energy will form a vital component of the worlds energy mix. This has resulted in a number of countries, communities and companies investing significantly into solar energy. Within solar, both solar PV and solar thermal present exciting business opportunities. The capital costs for solar PV are expected to decrease significantly over the next five years, and emerging high efficiency solar thermal technologies offer hope for a significantly lower cost of energy from solar thermal in the next five years. The above developments thus present a wide range of attractive business opportunities along the entire solar energy value chain. Opportunities exist for businesses and entrepreneurs both small and large, and in domains that are emerging and niche. Entrepreneurs and investors have a need for a comprehensive resource that identifies the key drivers for opportunities in this industry, and provides insights on the extensive range of these opportunities.
Update - Urja Unlimited has launched its Urja Unnati Program for Livelihood & Energy Assurance in Rural Area especially for women - Partnering with the several NGOs/MFIs/ Cooperatives/ Producer Companies for reaching out to the remotest part of the country. - New ideas developed for PV-based small businesses. - Urja Unlimited is in process to partner with organizations to implement its innovation poverty reduction model through Green Village and Watt a Village - one of the largest rural energy programs in India.
Urja Unlimited currently is running a rural program - Urja Unnati for over 2 years now, wherein the key objectives are: Establishment of a micro enterprise promoting entrepreneurship Promoting concepts around clean energy establishment of a rural energy center
Livelihood Promotion and Empowerment for people running the micro-enterpriseregular income generation
For the past 2 years, Urja Unlimited has been working in Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra, Rajasthan and Uttrakhand for promotion of solar based lighting solutions.
train to run and maintain it. The point is not to improve technology or even installation this is the easiest part, the secret is repair and maintenance, and after installation make them service must be immediate within easy reach and inexpensive, the maintenance and repair must be carried out by the trained women. Most recently, Under MNRE/AIWC training program on Application of Solar Energy Instrumentation for Income Generation, our trainers have trained the women form resettlement colonies in installation, maintenance and repair of domestic devices like solar lanterns, home Lighting system, down- light and solar box type & parabolic solar cookers with a view to set up solar centers in these areas so that these women will have sustainable income.
Chapter 3- Methodology
Urja Unlimited is working on a strategy to launch two of its products, namely solar tube light and solar lantern in the Faridabad district having the street vendors and hawkers as its customer base. The project was done to assess the feasibility of three plans namely, the full payment scheme, the installment scheme and the bank linkage scheme and to position and launch the product in one of the above mentioned three plan segments which is the most appropriate. As part of the project, the methodology adopted included two procedures. Firstly, a structured questionnaire was designed with the objective of doing a market survey to understand the needs of the target consumers of the product. Secondly, promotion of the solar lantern and tube light was done through the distribution of flyers and posters among the hawkers and vendors of Faridabad district. The aim was to target as many number of hawkers and vendors in Faridabad district as possible.
Our primary focus in the research is to do a market survey among the sampled hawkers and to record and analyze their responses which will test the feasibility of the launch of the solar tube light in one of the three above-mentioned schemes. Before conducting a detailed analysis of the raw data, two mentionable considerations are: 1) Although we have promoted the solar tubelight among 250 hawkers and vendors in Faridabad region through distribution of flyers and pamphlets, the survey was conducted only among vendors who did not use 220Volts A.C. lighting solutions. 2) The vendors who did not have fixed shops and operated on moving carts were also eliminated from the purview of the survey since they will not fit in the installment plan and since most did not have covered carts it was impossible to install the solar tube light on the carts.
15%
77%
The above pie-chart depicts the number of years for which the hawker is doing business. As we see 77% of the hawkers are doing business for 1-5yrs followed by 15% hawkers who are doing business for 5-10years. This means that most of the vendors in the sample size are relatively new although they have financial viability to pay installments and there is less risk of moving business. An advantage of having relatively new vendors or hawkers is that if advertised vigorously it can push up sales of solar tube lights quickly since most new vendors will like to install bright LED solar tube lights as a means to make themselves visible distinctively and as a result attract more customers. The second analysis in the research is about the type of lighting solutions the hawkers are using. The types of lighting solutions are broadly divided into battery lighting system, candle/kerosene lamp/gas light/petromax, Chinese LED/emergency light and nothing.
9%
3%
63%
The above pie-chart depicts the type of lighting solutions the vendors/hawkers are using. 63% or the majority of vendors in the sample size are using battery lighting systems which consist of inverter, battery and CFL lamp. It is followed by users of candle/kerosene lamp/gas light/Petromax which account for 25% of the total sample size. 9% of the vendors are using Chinese LED/emergency light and the remaining 3% are using nothing. 88% of vendors using battery lighting solutions and candle/kerosene/gaslight or petromax provide a good prospective customer base since the solar tubelight is mainly aimed at two things- reduced expenditure on lighting which induces increased savings and at the same time eliminate the ill effects of obnoxious fumes on the vendors health. The third analysis is on the monthly average income, expenditure and savings pattern of the hawkers and vendors. This analysis serves two purposes. Firstly, it helps assess the repayment capacity of the vendors and hawkers. Secondly, it also enables understand the amount and percentage of the income, expenditure and savings being spent on battery lighting system or candle/kerosene lamp/gaslight or petromax.
Savings, 2500
The above pie-chart depicts the monthly average income, expenditure and savings of the sample size of the vendors and hawkers. Out of the average monthly expenditure, Rs 300 is spent only on lighting purpose which is 6% of the expenditure. This percentage comes to about 8%-10% for users of candle, kerosene lamp, gas light or petromax. The vendors save Rs. 2500 per month on average or about 33% of the total income. If the expenditure on lighting can be eliminated, this savings will go up to 37%-40% of the total income and this in turn will be a unique selling proposition of the solar tube light. In the next section the detailed technical specifications of the tube light and specifications of the installment and bank linkage plans are discussed.
Charge Controller
5 Amps
Solar Panel
8 Watt, 12 Volts
Battery
The table above gives details on the technical specifications of the tubelight. The battery if used properly as per instructions provided in the user guide will last for a period of 18-20months after which the backup time of the tubelight gets reduced and the battery needs to be replaced. The cost of a unit of 7.2H, 12 Volts battery is Rs.300. the package of the solar tube light will contain one unit of solar tubelight, one unit of battery, one charge controller and one solar panel along with the clamps for installation and user manual book. The entire unit except the battery has warranty for one year which does not cover accidental damage. The battery has warranty for six months. The rated life of the tubelight is 20,000 hrs. and that of the solar panel is 12-15 yrs. If handled properly as per instructions.
Customer Needs
The most important analysis before any product launch is to assess the needs of the customer. A product launch can only be successful if it is molded according to the needs of the customer. From the survey of the sampled vendors and hawkers a list of customer needs has been drawn and depicted below.
Customer Needs
Customer Needs
98% 85% 76% 63% 55% 46% 83%
The above bar graph depicts the percentage of sample hawkers and vendors who have responded to the different parameters for the solar tube light. 98% of the vendors have said that good quality is most important for the solar tubelight. 85% of vendors think that the cost of the solar tubelight should be reasonable. 83% of vendors think that value for money is most important for the solar tubelight. This is followed by long lasting, excellent technical and after sales service, minimum 2 yrs. Warranty and easy to install and operate with percentages of 76%, 63%, 46% and 55% respectively. The solar tube light of Urja Unlimited features all the customer needs except the two years warranty and the price which most of the customers think is exorbitant. The customers opinion on pricing of the tubelight is depicted through the next pie-chart.
The above graph depicts the customer perception on the pricing of the solar tube light. 48% of the vendors feel the price of the tubelight should be between Rs.1800-2000. 30% of the vendors feel the price should be between Rs.1500-1800 and only 6% think that it should be more than Rs.2500.
Repayment Plans
There are three types of repayment plans for the solar tube light. The first plan is full payment. The second plan is installment payment. There are two options in installment payment- the Plan 500 and the Plan 1000. The third option is the bank linkage system. The salient features of the second and the third plans are explained in detail in the table below. Plan 1000 Plan 500 Bank Linkage
In this plan the customer In this plan, the customer This plan is applicable for needs to pay Rs.1000 as down needs to pay the entire amount customers who have bank payment and the rest Rs2000 of Rs.3000 in 6 equal monthly account. The bank account of in equal installments of installments of Rs.500 each the customer will be linked with the bank account of Urja Unlimited and Rs. 250 will be transferred from the
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Rs.500 in 4 months.
bank
The third plan which is the bank linkage option is the most feasible and cost effective option both for the organization as well as for the customers. The customers are benefitted since they will not have to pay hard cash from their business every month. The organization is benefitted because there is no collection cost in this plan as in Plan 500 or Plan 1000 where an individual needs to visit the hawkers every month for collection of installments for which he needs to be paid. Also, there is minimum risk of default of installment payment by the vendors. Most of the vendors have also agreed to the bank linkage option as the best repayment plan. This is supported by the pie-chart below.
30% 59%
The above pie chart shows that almost 60% of the vendors and hawkers are in favor of the bank linkage option. Most of the vendors are having bank accounts so bank linkage will not be an
issue. The few vendors who do not have bank accounts can get their account opened with the help of Urja Unlimited.
The use of solar tubelight will reduce risk of fire in the shop due to spillage of kerosene lamp or petromax or candle. It will also reduce the health hazards which occur due to inhalation of toxic fumes from kerosene lamp or gas light. It will also reduce the emission of carbon dioxide in the atmosphere thereby promoting clean and green environment.
SWOT Analysis
SWOT analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business, or project team that give it an advantage over others
Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others
Opportunities: external chances to improve performance (e.g. make greater profits) in the environment
Threats: external elements in the environment that could cause trouble for the business or project
Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. Urja Unlimited being a start-up venture has high potential of growth in the industry. Being a unique project proposition it has certain advantages in the industry which are also its key strengths. But its flagship product, the solar tube light is not without its share of weaknesses and threats. But these weaknesses and threats also provides opportunities for innovation which if rightly capitalized upon can turn into strengths and thereby consolidate its brand value and market share, making it a fierce and formidable competitor in the industry. A detailed SWOT analysis is thereby presented in the following table.
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Strengths Technically sound team Good after sales service High quality product Good value for money Easy installment options No similar branded products in the market Heavy promotion and advertising can be done in the market
Weaknesses Price of the product is a major deterrent No other charging option except solar Procurement and assembly of the products is a time consuming process High demonstration cost Presence of low human resources may affect productivity in case of high demand in the future
Opportunities Break the stranglehold of other lighting systems New concept in the market Building own brand High sales, high profitability and return on investment equal to other electronics Huge sustainable market and growth
Threats Presence of low-cost Chinese LED in the market The vendor can discontinue
installments High cost of recovery of installments in case of Plan 1000 and Plan 500 The vendor can discontinue business and move to some other place with the lighting solution thereby become untraceable
Competition Situation
Competitor analysis is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Profiling coalesces all of the relevant sources of competitor analysis
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into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment. Competitor analysis is an essential component of corporate strategy. It is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives. As a result, traditional environmental scanning places many firms at risk of dangerous competitive blind spots due to a lack of robust competitor analysis. The solar tube light, being the flagship product of Urja Unlimited calls for a detailed competition situation analysis to assess its position and threat level situation in the market. The following points provide a comprehensive competition situation analysis profile of the solar tube light in the market of Faridabad region. There is no real branded competition in the market. The solar tube light to be launched by Urja Unlimited will be one of its kind product in the market. There are some generic brands from China but they are not reliable and there quality is also shoddy. The tube light has the advantage of being the first branded entry in the market. With vigorous advertising it can capture market easily and consolidate its brand positioning in the market. If it can capture a major market share, it has the advantage of posing entry barriers for other players in the market of Faridabad region. Faridabad being an industrial region and densely populated area has a large number of hawkers. This provides a huge sustainable market for the solar tube light manufactured by Urja Unlimited.
approaching "pure competition", in which available profits for all firms are driven to normal profit. Three of Porter's five forces refer to competition from external sources. The remainders are internal threats. Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. The Porter Framework Analysis for the solar tube light manufactured by Urja Unlimited is depicted below.
The bargaining power of suppliers is high due to the presence of similar lighting solutions organization in the industry
The bargaining power of consumers is high due to presence of cheaper substitutes in the market
There is no real threat from substitute products due to absence of similar high end lighting solutions in the market
Sales Objectives
Given the current market situation, the organization is aiming at a constant projected growth rate of 25% in the number of units sold per month. So if we assume the sales in the 1 st month to be 100 units, the annual sales pattern in the number of units is depicted in the bar graph below.
50
0
Healthy environment: Urja Unlimited has started to work with the hawkers to explain to them the positive impacts of using solar lighting solutions. The aim is to enlist them as supporters in the climate change movement and build a path breaking movement that is bottoms up. Each solar lantern that gets lit up prevents fumes from a kerosene lamp to pollute environment
Incremental Incomes: Some of the vendors have expressed willingness to run business for longer hours. Others have expressed how they have been able to attract incremental clientele through the unique use of solar lanterns vis--vis the other hawkers operating in the vicinity
Recommendations
On the basis of the above analysis of data, the following recommendations are proposed. Robust advertising and promotion of the product is needed to capture market and consolidate market share being the first product of its kind in the market. Pricing needs to be re-worked since most consumers find price of the product to be exorbitant. Brand promotion activities need to be undertaken to increase brand value of the product. Hawkers need to be brought on a common platform and hawker groups need to be formed. These groups will then be linked with banks that will provide them with micro loans for purchase of the lighting solutions. In this way the cost of recovery of installments and the risk of installments can be curtailed. The formation of hawkers groups or hawkers SHGs will be formed in the following pattern.
Framework for Hawker SHGs
8-10 members of hawkers make one hawkers group which is then linked to bank for loans by the name of the group Such group of any particular area makes one hawker organization which can be used to generate further livelihood opportunities
Hawker Federation
Hawker Association
Hawkers Group
Hawkers Group
Hawkers Group
Hawkers Group
Hawkers Group
8 to 10 Hawkers
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A robust distribution network needs to be developed. The distribution strategy will be:
In the first stage a vendor to vendor distribution strategy needs to be followed in which each vendor will be given incentives if he can refer at least five other customers. In the second stage an entrepreneurial distribution model will be followed in which a vendor/distributor will be responsible for distribution network of a particular area .
Conclusion
The solar tube light manufactured by Urja Unlimited is a one of its kind product in the market. It consists of LEDs which is much brighter than conventional electrical lights and being charged by solar energy means it is eco friendly at the same time. It enables savings and provides livelihood opportunities. If properly marketed this product has huge sustainable market since the solar concept has already picked up pace in India and is the only answer to energy problems in the future.
Chapter 5- Bibliography
1. Strategic Plan for New and Renewable Energy Sector for the Period 2011-17 by Ministry of New and Renewable Energy, Government of India 2. Report on Analysis of Solar Energy Industry in India and its Future Prospects by NOVONOUS 3. Preview of Solar Energy Market Potential and Business Opportunities by altprofits.com 4. http://en.wikipedia.org/wiki/Porter_five_forces_analysis accessed on 20th of January, 2012 at 0100hrs. 5. http://en.wikipedia.org/wiki/SWOT_analysis accessed on 20th of January, 2012 at 0100hrs. 6. http://en.wikipedia.org/wiki/Competitor_analysis accessed on 20th of January, 2012 at 0100hrs.