SELCO:HARNESSING SUNLIGHT TO CREATE LIVELIHOOD

Anant Tiwari Ashish Agarwal Niket Vanker Prachi Patel Priyanka Mehta Puja Barman

CASE ANALYSIS

SELCO is a for profit, commercial entity registered in the US, with most of its operations in India and having a majority of its stakes held by a Swiss agency. In the first fifteen years of its operation, it has succeeded, albeit on a low scale, in achieving its aim of bringing affordable solar energy solutions to the rural poor of India while still reaping profits for the company. Having earned a name for itself, SELCO now aims at reaching out to a wider section of rural population without any compromise on quality and ethics. In order to do this, it needs to take care of a numbers of variables, ranging from increasing manpower base of the company to tackling of outside competition. The confluence, or atleast the bridging of gap between commercial and social considerations will form the basis of such expansion.

GENERAL ENVIRONMENT
Political Environment:Unlike Germany, lack of Support/subsidies/funding from the government to decentralize energy service providers like SELCO. Economic Environment:1.Rural banks are not catering to the local population in spite of having resources to do so, because they did not believe in sustainability of plans of SELCO. 2.Dependence on international agencies for heavy investments due to lack of institutional financial support within the country owing to negative perception of solar industry as a sustainable profit making venture. 3.Since the target customer is the rural poor with a very low purchasing power, availability of credit to the customer is also to be taken care of by SELCO.

GENERAL ENVIRONMENT(CONTD.)

Social Environment:Local social conditions have a strong bearing on requirements of SELCOs customers. This makes it essential that the companys personnel become aware of the social context of their customers so that they can sell personalised solutions to them Technological Environment:The basic solar industry is not very technology intensive. However, it is the cheap maintenance of solar systems and innovative customer centric products that play the key role. Legal Environment:By virtue of its very nature of ownership and operations, SELCO faces the regulatory environment of three nations ie. US, Switzerland and India.

INDUSTRY ENVIRONMENT
High installation costs for the consumer.(Rs. 20,000 for a 4-light system) Since standardised product do not meet consumer requirements, large scale production designs are not feasible.

COMPETITIVE ENVIRONMENT
Cheap standardised products of low quality tend to eat into the revenues of SELCO. Thus, there is a pressure to keep prices as low as possible while still not compromising on quality. Kerosene based lighting systems have been in vogue for a long time and give a strong competition to solar lighting systems, especially where the image of solar systems is not very positive.

INTERNAL ENVIRONMENT

Strengths :Low attrition rate. Strengths based on the assumption that competitors lack the below features:1. Close relations with their customers. 2. Lower costs due to heavy reliance on mouth publicity for marketing. 3. Customised solutions as per consumers budget limitations. 4. Good response time w.r.t customer complaints. 5. High degree of transparency with suppliers and support to them during hard times. 6. Encouragement to innovation through incubation lab.

STRENGTHS
Low attrition rate. Strengths based on the assumption that competitors lack the below features Close relations with their customers. Lower costs due to heavy reliance on mouth publicity for marketing. Customised solutions as per consumers budget limitations. Good response time w.r.t customer complaints. High degree of transparency with suppliers and support to them during hard times. Encouragement to innovation through incubation lab.

WEAKNESSES
Highly centralised structure. Absence of a second line of leadership. Inability to offer high compensation to fresh engineering and management graduates.

OPPORTUNITIES
To transform from a solar lighting to an energy solutions company. Untapped market in Karnataka and the rest of the country.

THREATS
Cheaper low quality products infiltrating the market. Since the majority stake lies with the Swiss Agency, their basic objective may be compromised in the future.

OBJECTIVE
Short

term:Increase the profits by increasing the sales in Karnataka, by optimising the scope. Long Term :To be able to cater to the energy needs of the rural poor on a global scale.

PROBLEM STATEMENT

To widen the customer base of SELCO and earn more profits. CRITERIA(not in the order of priority) 1. Affordability 2. Quality 3. Availability of credit to customers 4. Inclusion of varied energy needs of the country

ALTERNATIVES

SELCO to setup energy service centres in Karnataka as well as the neighbouring states. Accordingly, recruitment for various positions to be done. The centralisation of the organisation needs to be reduced so that geographically separated units can be effectively controlled locally. SELCO to setup additional ESCs in Karnataka only. For other states, it needs to act as facilitator to provide seed funds and training to new enterprises interested in working in the sector with the same ideology as that of SELCO. Additional manpower to be hired only for Karnataka and no structural changes required. In this case, it needs to be ensured that the new enterprises, although functioning independently from SELCO, adhere to SELCOs philosophy and are independent

EVALUATION OF ALTERNATIVES
Criteria/Alternative Affordability Quality Availability of credit to customers Inclusion of varied energy needs of the country Alternative 1 Needs to be ensured Alternative 2 Needs to be ensured

Minimum structural changes

Structural changes required

IMPLEMETATION

Based on the above evaluation, we are going for alternative 2. SELCO to setup additional ESCs in Karnataka only. For other states, it needs to act as facilitator to provide seed funds and training to new enterprises interested in working in the sector with the same ideology as that of SELCO. Additional manpower to be hired only for Karnataka and no structural changes required. In this case, it needs to be ensured through proper training that the new enterprises, although functioning independently from SELCO, adhere to SELCOs philosophy. Also, credit for customers will have to be arranged by these organizations.

CONTINGENCY PLAN

In case the new enterprises are not adhering to SELCOs mission, SELCO shall appoint some of its own workforce as supervisors in these organizations. Their role will be to re-train other functionaries with respect to SELCOs methodology and to ensure that these were put into practice. In case, this also does not work, funding and other support shall be withdrawn and the supervisors appointed they will be asked to set up SELCOs ESCs in those areas. Additional manpower will have to provided to them for this venture.

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