Title: Background and Potential Opportunities for SELCO
1Background and Potential Opportunities for
SELCO
- Harish Hande
- VP
- November 2003
2- Background Overview
- Recent Developments
- Long-term Opportunities
- Next Steps
3Background Overview
Company History
- 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 scale-up 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
4Background Overview
The Market
- Throughout the world, people lack access to
reliable sources of electricity - 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 - Without reliable access to electricity,
households and businesses are using alternative
sources of lighting and electricity - 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 - Communications
- Clean drinking water and efficient irrigation
- Water heating
- Refrigeration
- Other Productive Uses
5Background Overview
Current Products- Home Lighting Systems
- SELCOs 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. - 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.
6Background Overview
Current Products- 12-volt and AC appliances
- In addition to SHS, SELCO sells other 12V DC
appliances - 12 volt Cassette Recorders,
- Radios,
- Black-and-white color televisions,
- Soldering Irons
- Fans
- Door Bells
- Other
- SELCO sells systems for AC appliances
- Mixers,
- Color TVs,
- EPBAXs etc.
- CFLs for energy efficient lighting
- SELCO designs photovoltaic systems for
residential and commercial users needing - Back up power
- Primary power
- Short Term Emergency power
7Background Overview
Current Products Large Installations
- In addition to individual systems for homes and
businesses, SELCO also designs, installs, and
services large-scale systems including - 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
- Example of customers for such large scale systems
are - Seminaries and religious complexes
- Residential Dormitories for Schools
- Financial Institutions.
- Wild Life Parks and Remote Recreation Centers
- Approximately 15 of SELCOs revenue comes from
large-scale projects.
8Background Overview
Solar Water Heating
9Background Overview
Distribution Network
HQ Each subsidiary has a headquarters located in
large commercial city, responsible for overall
company management.
SSCs SELCOs retail showroom, inventory depot,
and base of sales and service operations. Located
in central rural towns.
Regional Offices Located strategically
throughout service territories, each office
directly manages between 5-10 SSCs
Salesforce Dealers SELCOs direct sales force
and shops (dealers) market SELCOs products to
potential customers
10Background Overview
Subsidiary Headquarters Reg. Offices
- Headquarters SELCO subsidiary operations are
managed through country-level subsidiary
headquarters operations located in a central
commercial city. Headquarters operations are
responsible for - Central Management
- Operations Management
- Finance Accounting
- Purchasing
- Regional Offices centers have recently been
introduced for better management of SSCs.
Regional operations are responsible for - 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.
11Background Overview
Sales Service Centers (SSCs)
- 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.
12Background Overview
Sales Executives and Agents
- Salesforce
- SELCO employs a direct salesforce of 90
salespeople in India and Sri Lanka. - Salesmen visit customer homes to introduce SELCO
products and services. They also introduce
financial packages to the potential clients - Dealers
- In addition to its sales executives, SELCO
utilizes a network of independent dealers to
market its products. - Dealers introduce potential customers to SELCOs
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.
13Background Overview
Installation and After-Sales Service
- 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 SELCOs customers. -
- SELCO believes that its commitment to high
quality service and lasting customer
relationships will be its key to long-term
success.
14Background Overview
Consumer Finance
- 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.
15- Background Overview
- Recent Developments
- Long-term Opportunities
- Next Steps
16Recent Developments
Product Line Expansion
- 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 - 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.
17Recent Developments
Telecommunications
- 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.
18Recent Developments
Water Pumping Micro-Drip Irrigation
- 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. - 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.
19Recent Developments
Product Design
- 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.
20Recent Developments
Other Productive Uses
- 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 Lankas 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 - Sewing machines
- Market stall light rental
- Entertainment products (TV/DVD, Karaoke, Games)
- SELCO is a finalist in the World Banks
Development Marketplace, which includes 250,000
in grant funds for development and testing.
21- Background Overview
- Recent Developments
- Long-term Opportunities
- Next Steps
22Long-Term Opportunities
Expanded SELCO Vision Moving beyond Strictly
Solar
- Sustainable
- High-Quality
- Branded
- Consumer Durables
- Empowering customers
Installation and after-sales service at the
Customer Home on all company products sold
Service
Product
Consumer Durables Financing
Finance
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
23- Background Overview
- Recent Developments
- Long-term Opportunities
- Next Steps
24Next Steps
Summary
- 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
- 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.
25Next Steps
Milestone Schedule
Target
- Operational Improvements
- Roll-out of Company-wide Management Information
System - Standard company structures and policies
implemented - Parent company management team fleshed out
- Indian PVMTI investment-led growth in sales
outlets - Sri Lankan -- Cashflow improvements realized A/R
reduced - Vietnam future resolved (closure or scale-up as
project office) - New Opportunity Identification
- Next 2-3 Country Opportunities Identified
- Feedback from additional products introductions
12/03
3/04
Early 2004
12/03
12/03
11/03
2/04
12/03
26Next Steps
Investment Related
Target
- Investment Materials Preparation
- Business Plan written
- Financial Projections Complete
- Polished Investment Presentation Ready
- Offering Documents Drafted
- SELCO consolidated March 31, 2004 audit
-
- Investors Identification Roadshow
- Potential Investors identified
- Initial contact made and shortlist identified
- SELCO full road show presentations to interested
investors - Closing
- Closure of 2 to 5 million in equity
10/03
12/03
1/04
2/04
5/04
11/03
Early 2004
Starting 4/04
Mid-2004
27Next 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?