Transcript Background and Potential Opportunities for SELCO

Background and Potential
Opportunities for SELCO
Harish Hande
VP
November 2003
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Background & Overview
Recent Developments
Long-term Opportunities
Next Steps
Background & Overview
Company History
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The Solar Electric Light Company
(SELCO) was founded in 1997 to manage
subsidiary companies engaged in the
selling and servicing of solar electric
lighting systems.
SELCO was started by the Solar Electric
Light Fund (SELF) to commercially scaleup a distribution and retail network
through which to sell and service
household lighting systems.
The Company is a Delaware-registered
US corporation with majority interests in
two operating subsidiaries in India and
Sri Lanka, and maintains a project office
in Vietnam.
The company is approaching profitability
at revenues of $5 million per year, and
employs 350 people
Background & Overview
The Market
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Throughout the world, people lack access to
reliable sources of electricity
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Without reliable access to electricity,
households and businesses are using
alternative sources of lighting and electricity
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Un-served: Approximately 2 billion people
lack access to primary grid electricity
Underserved: Many of those who actually
have access to the grid do not reliably
receive it
Kerosene for wick lamps
Dry-cell batteries for flashlights and radios
Recycled car batteries for lighting and TV
Generator sets as AC electricity backup
Solar home systems for DC electricity
In addition to home lighting and electricity,
there are other significant needs waiting to be
met
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Communications
Clean drinking water and efficient irrigation
Water heating
Refrigeration
Other Productive Uses
Background & Overview
Current Products- Home Lighting Systems
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SELCO’s primary product is a solar-photovoltaic home
lighting system. A solar photovoltaic module is used to
charge up a deep-cycle battery during the day, and
discharged during the evening to run lights, TV, radio,
and other small DC appliances.
Most of SELCO home-lighting systems are custom
designed to cater to the varied needs of rural, semi-rural,
semi-urban and urban clients.
SELCO stocks a range of DC lighting options to meet the
particular needs of individual customers.
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Reading Lights
Night Lights
Focus Lights
Corridor Lights
Outdoor Lights
Portable Lights
Restroom lights
Each solar home lighting includes installation and four
service visits during first year.
Background & Overview
Current Products- 12-volt and AC appliances
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In addition to SHS, SELCO sells other 12V DC
appliances
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SELCO sells systems for AC appliances
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12 volt Cassette Recorders,
Radios,
Black-and-white & color televisions,
Soldering Irons
Fans
Door Bells
Other
Mixers,
Color TV’s,
EPBAX’s etc.
CFLs for energy efficient lighting
SELCO designs photovoltaic systems for residential
and commercial users needing:
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Back up power
Primary power
Short Term Emergency power
Background & Overview
Current Products: Large Installations
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In addition to individual systems for homes and
businesses, SELCO also designs, installs, and
services large-scale systems including:
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Example of customers for such large scale
systems are
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Large AC and DC systems of up to 20KW
Solar PV/ Grid-intertied AC hybrid systems
Water heating systems up to 1k liters/day
Water pumping systems from 7k to 120k
liters/day of surface and submersible pumping.
Telecommunication repeater stations
Over 25 KM of installed DC electric fencing
Seminaries and religious complexes
Residential Dormitories for Schools
Financial Institutions.
Wild Life Parks and Remote Recreation Centers
Approximately 15% of SELCO’s revenue comes
from large-scale projects.
Background & Overview
Solar Water Heating
Background & Overview
Distribution Network
SSC
Salesforce
Reg
Offc
SSC
Salesforce
Dealers
HQ
SSC
Salesforce
Dealers
Reg
Offc
SSC
Customers
Dealers
Salesforce
Dealers
HQ:
Each subsidiary has a
headquarters located in
large commercial city,
responsible for overall
company management.
SSCs
Regional Offices
Located strategically SELCO’s retail showroom,
throughout service inventory depot, and base
of sales and service
territories, each office
operations. Located in
directly manages
central rural towns.
between 5-10 SSCs
Salesforce & Dealers:
SELCO’s direct sales force
and shops (dealers) market
SELCO’s products to
potential customers
Background & Overview
Subsidiary Headquarters & Reg. Offices
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Headquarters: SELCO subsidiary operations
are managed through country-level subsidiary
headquarters operations located in a central
commercial city. Headquarters operations are
responsible for:
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Central Management
Operations Management
Finance & Accounting
Purchasing
Regional Offices centers have recently been
introduced for better management of SSCs.
Regional operations are responsible for:
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Management of SSCs under its jurisdiction
Local sales & marketing
Expansion in its area of operations.
There are currently two regional offices in each
India and Sri Lanka.
Background & Overview
Sales & Service Centers (SSCs)
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SELCO sells its products through a
wholly-owned network of sales and service
centers (SSC) located throughout the
areas of its operations.
Each SSC contains a showroom for
products and serves as the basis for sales
and service operations for the given
geographic territory
SELCO currently has 32 SSCs in India
and Sri Lanka, with plans for over 50
additional SSCs in the next five years.
It is anticipated that new centers will be a
combination of wholly-owned stores and
franchised dealerships operating under
defined company policies.
Background & Overview
Sales Executives and Agents
Salesforce:
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SELCO employs a direct salesforce of 90
salespeople in India and Sri Lanka.
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Salesmen visit customer homes to
introduce SELCO products and services.
They also introduce financial packages to
the potential clients
Dealers:
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In addition to its sales executives, SELCO
utilizes a network of independent dealers
to market its products.
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Dealers introduce potential customers to
SELCO’s products and steer interested
ones directly to SELCO SSC or sales
executives to close the sale. For their
efforts, dealers are paid commissions of
between 5% and 10%.
Background & Overview
Installation and After-Sales Service
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SELCO provides installation and after-sales
service packages on all products sold.
Prior to closing a sale, an installation technician
will visit customers home to tailor product to best
fit customer electrical and lighting needs.
After sale, trained SELCO technicians visit
customer home for installation. On a periodic
basis, service technicians visit customers homes
to check on system performance.
After the initial 1-year of included service, annual
maintenance contracts (AMCs) are available for
purchase by SELCO’s customers.
SELCO believes that its commitment to high quality
service and lasting customer relationships will be
its key to long-term success.
Background & Overview
Consumer Finance
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SELCO also provides access to consumer
financing through its partners. As its primary
products represent large customer purchases,
typically 3-6 months salary or equivalent, SELCO
bundles purchasing with finance through local
financing organization.
With financing at 10-20% p.a., a $400 solar home
lighting system at 20% down can be purchased
over four years for between $10-12 per month,
which is similar to expenditures for competing
power sources.
SELCO has developed relationships with over
thirty rural banking networks in rural India and
Sri Lanka, as well as working extensively with
credit cooperatives, leasing companies, and other
local sources of finance.
Through the provision of financing, SELCO aims to
provide “one-stop shopping” for customers seeking
reliable home lighting and electricity.
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Background & Overview
Recent Developments
Long-term Opportunities
Next Steps
Recent Developments
Product Line Expansion
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SELCO has recently expanded its product offerings beyond solar electric
lighting systems
With its network of service centers, trained sales force, and service
technicians, SELCO has the opportunity to introduce additional
products and services
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Telecommunications
Water Pumping coupled with drip Irrigation
Refrigeration
Other productive uses, e.g., powering rice mills, spray painting machines etc.
SELCO believes that it can be a valuable channel partner for
manufacturers and distributors lacking direct retail access to
customers.
SELCO also believes that with its network of service centers coupled
with its excellent relationship with rural financial institutions, it can
provide a fantastic opportunity to like minded organization to sell and
promote technologies that could directly impact the quality of life in the
rural areas.
Recent Developments
Telecommunications
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SELCO has entering the home and small
business telecommunications market
through sales of wireless local loop
telephones.
In late August, 2003 SELCO sold its first 50
wireless local loop (WLL) telephone systems
through Mobitel and the Sri Lankan
Telecommunications administration.
Each WLL unit employs a radio to connect
individual homes to central
transmitter/receivers.
The combination of wireless telephone and
power provide families and businesses with
the enter the 21st century without waiting for
wired power or communications.
Recent Developments
Water Pumping & Micro-Drip Irrigation
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Solar water pumps can be coupled with drip
irrigation kits for water conservation and
increased economic activities. Kits range in
size from a 20-litre bucket irrigating 25 m²
to customized systems covering 1000 m² or
more.
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Crops irrigated by drip systems show water
savings of up to 50 percent resulting in
reduced labor and energy costs.
Controlled application of water to the plants
suppresses weed growth, further reducing
labour costs.
Increased frequency and uniformity of water
application plus reduced competition from
weeds results in improved plant growth and
yield increases of 30 to 50 percent.
Recent Developments
Product Design
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SELCO has entered into product development
and product design Currently developing an
integrated type wall-mounted battery box.
With its installed base, technical capabilities,
and understanding of the market, SELCO
believes it can be a SELCO is tremendous
source of information in product design.
SELCO expects to take control of product
development and design, but partner with
contract manufacturer rather than begin
manufacturing directly.
SELCO can be a source of value for other
product design firms interested in direct
testing, market feedback, and beta-testing.
Recent Developments
Other Productive Uses
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SELCO is beginning to package solar electric
systems with productive loads to sell or lease to
rural entrepreneurs
SELCO is currently introducing the first 12V DC
refrigerators for rural store owners. We have
partnered with one of Sri Lanka’s largest
beverage distributors and refrigerator
manufacturer to undertake a marketing study to
determine potential market for small
refrigerators.
SELCO is looking at a number of potential
productive use applications, including:
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Sewing machines
Market stall light rental
Entertainment products (TV/DVD, Karaoke,
Games)
SELCO is a finalist in the World Bank’s
Development Marketplace, which includes
$250,000 in grant funds for development and
testing.
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Background & Overview
Recent Developments
Long-term Opportunities
Next Steps
Long-Term Opportunities
Expanded SELCO Vision: Moving beyond Strictly Solar
• Sustainable
• High-Quality
• Branded
• Consumer Durables
• Empowering
customers
Product
Service
Finance
Installation and aftersales service at the
Customer Home on
all company products
sold
Consumer
Durables
Financing
SELCO has the potential to utilize its distribution network
and customer relationships to be at intersection of product,
service, and finance:
Selling high quality, branded consumer durable products
coupled with after-sales service and consumer financing
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Background & Overview
Recent Developments
Long-term Opportunities
Next Steps
Next Steps
Summary
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SELCO anticipates seeking additional equity in mid-2004 to
undertake additional opportunities.
We believe there are a number of milestones that should be
completed prior to a successful equity offering.
These milestone relate to:
– Advancements in SELCO Operations:
– Identification of New Opportunities
– Preparation for Investment Offering
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SELCO believes that it will be able to complete these required
tasks and begin full equity round by March, 2004, complete
equity round by mid-to-late 2004.
Next Steps
Milestone Schedule
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Operational Improvements:
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Target
Roll-out of Company-wide Management Information System
12/03
Standard company structures and policies implemented
3/04
Parent company management team fleshed out
Early 2004
12/03
Indian PVMTI investment-led growth in sales outlets
Sri Lankan -- Cashflow improvements realized; A/R reduced
12/03
Vietnam future resolved (closure or scale-up as project office)
11/03
New Opportunity Identification
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Next 2-3 Country Opportunities Identified
Feedback from additional products introductions
2/04
12/03
Next Steps
Investment Related
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Investment Materials Preparation:
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10/03
12/03
1/04
2/04
5/04
Investors Identification & Roadshow
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Business Plan written
Financial Projections Complete
Polished Investment Presentation Ready
Offering Documents Drafted
SELCO consolidated March 31, 2004 audit
Target
Potential Investors identified
Initial contact made and shortlist identified
SELCO full road show presentations to
interested investors
11/03
Early 2004
Starting 4/04
Closing
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Closure of $2 to $5 million in equity
Mid-2004
Next Steps
Questions….
• Who is the appropriate investor audience for
SELCO?
• What additional information / backup
documentation/proof is needed to present a truly
compelling story?
• How should we prioritize milestone achievement
prior to equity round?