Ranniti Triple Bottom Line- The New Benchmark

The Strategist case studyTeam Unnamed

IIM LucknowKalyan V B H

Solomon Dheeraj

Agenda• Problem statement• Market analysis

– Off Grid electricity challenge– India’s solar dream– Kerosene market

• Scalability– Opportunities in Urban areas– Global Expansion– Small businesses– Expansion into mobile space– Solar home systems

• Benefits from Triple bottom line perspective– People– Planet– Profit

• Weaknesses and Challenges

Problem Statement

• ABS Lighting systems (ALS) manufactures and sells home lighting systems.– YoY revenue growth of 12% – Profit growth of 15%

• Adapting TBL concept in the context of “Rural off-grid solar lighting systems”– Strategic Fit– Business Sense– Technology feasibility– Financial feasibility

Market Analysis

Image Courtesy : www.barefootpower.com

Market Analysis- Off grid electricity challenge

• There are 1.5 billion people in the world without access to electricity.

• Limiting the productivity of nearly a quarter of the world’s population, hindering their ability to carry out basic activities at night or in the early morning

• Of these roughly 400 million people are in India. • About 44% of people lack grid electricity.• About 95,500 villages are still to be electrified• Huge opportunity for ALS in providing lighting for the

households in rural India that are off the grid based electricity supply

Market Analysis- India’s Solar Dream

• India receives solar energy equivalent to nearly 5,000 trillion kWh/year, which is far more than the total energy consumption of the country today

• The government has initiated innovative schemes and policies like JNNSM to accelerate the growth of solar energy.

• 20 million solar lighting systems to be deployed in rural areas by 2022

• Incentives include subsidies, soft loans, concessional duty on import of raw materials, excise duty exemption on certain devices/systems etc

Market Analysis- Kerosene Market

[Image Courtesy: www.barefootpower.com]

Scalability

• Solar Home systems – Consumers prefer solutions which can light multiple lights/devices

• Opportunities in Urban areas– In times of mounting electricity prices, Intermittency and low quality

of grid supply.

• Global Expansion– Africa with close to 700 million people projected to be living of the

grid by 2030• Small businesses

– Productivity in various small businesses which cannot afford full time grid connection

• Expansion into mobile space – No easy or cheap access to a means of charging their phones for many

TBL- People, Planet

• Social Benefits– Clearer, brighter and more dependable light that is conducive for

studying – A study of portable solar lighting impact in India found that the

introduction of solar lighting raised average study hours of students per household from 1.5 hours to 2.7 hours

– Kerosene lamps also lead to fires that cause severe burns and deaths. Solar lanterns do not emit any harmful or polluting fumes

– Farmers use them to go into the fields at night to water crops without fear of snakes.

– People can also stay up after dark to do chores and talk to neighbours, enhancing social life in the communities

TBL-People, Planet

• Environmental Benefits– Household and commercial consumption of kerosene worldwide is

440 million barrels of oil per year releasing 190 million tons of CO2 into the atmosphere annually, an equivalent of 30 million cars

– Each solar lantern can save the usage of about 80 litres of kerosene and reduce about 0.2 tones of CO2 emissions per year.

– Even if ALS manages to sell 2,00,000 solar lighting devices in the first year it would be able to save about 40,000 tonnes of emissions per year.

– This equals the amount of gas emitted by driving around the entire globe 4,500 times

TBL-People ,Planet

• Economic Benefits– Extended shop hours– Mobile phone charging – Craftwork in the evening– Longer working hours for occupational groups like artisans, textile

workers, and livestock herders– Outdoor shopkeepers can avoid periods of market closure due to wind

or rain– Cost of a month’s worth of kerosene can equal between three to five

days of income– One kerosene lamp costs about Rs.100 a month. Cheapest solar off-

grid systems pay for themselves within four-five months

Benefits from TBL perspective

(Image Courtesy : Lighting a billion Lives, LaBL, TERI NewDelhi)

TBL-Profit

• Costs– Over 40% drop in the global manufactured costs of today’s median

lantern within 5 years, with a corresponding decline in payback period is predicted. (Source: Lighting Africa, World Bank)

– Advantage India : Currently ~30% of the manufacturers are headquartered in China, 40% in India, 20% in developed nations, and under 5% in Africa.

– Distribution : Via private players, Government , NGO– Battery charging costs could be reduced through Hand crank dynamos

etc in BOP areas.

TBL-Profit

(Image Courtesy: www.lightingafrica.org)

TBL-Profit

• Market Projections– Population growing at 1.5-2%, adds 2 million households per year– All players together reached < 1 million households/year to date– Each household worth 20$ roughly per annum– Going by the market scenario ALS should target 1 million in the next 2

years• Pricing

– Strategy similar to that of its competitors. – Competitors like D. Light have been heavily successful offering a base

model of a solar lantern for Rs.500/- to an advanced model for Rs.2250/-

– A villager having 2 kerosene lanterns (Rs. 150) and spending Rs. 40 per lantern on fuel will now have an option that is brighter, cleaner, more durable and far more functional which pays for itself in 3-4 months.

Weaknesses and Challenges

• The large amount of land required for solar power plants places a big strain on the country’s resources

• Access to Finance– Major problem in rural areas– Can partner with MFI or Government Banks

• Distribution in the context of rural markets• Interaction with bureaucracy• Existing competition in the market

– Many new quality oriented players are entering the market and substantial investments are being made to correct for market failures.

– Established Lighting players like Osram, Philips, and Siemens etc already have started exploring and investing in the off-grid solar lighting space

– Even government initiated programs like TERI’s “Lighting a Billion Lives” have made huge inroads into rural markets already.

References

• Lighting Africa http://www.lightingafrica.org

• D.Light case study http://www.ashdenawards.org/files/reports/D.light%20case%20study.pdf• http://evanmills.lbl.gov/pubs/pdf/offgrid-lighting.pdf• Off Grid Lighting in India http://www.direc2010.gov.in/pdf/Off-grid%20Lighting%20in%20India.pdf

• Jawaharlal Nehru National Solar Mission http://mnre.gov.in/pdf/mission-document-JNNSM.pdf

• “India sitting on huge untapped solar PV off grid opportunities “ http://www.dnaindia.com/india/report_india-sitting-on-huge-untapped-solar-pv-off-grid-opportunities_1409078

• India’s Solar Dream http://www.off-grid.net/2007/05/16/india%E2%80%99s-solar-dream/

• “Off Grid Solar systems a growing market” http://solarpanels-china.com/off-grid-solar/off-grid-solar-systems-a-growing-market

• Efficient lighting opportunities, Barefoot power http://www.direc2010.gov.in/pdf/Efficient%20Lighting%20Off-Grid%20Opportunities.pdf

• Lighting a Billion Lives http://labl.teriin.org/

• A selection of lighting products.© Kellie Brown, Humboldt State University.

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