- Enterprise support transaction to provide infrastructure services (A160a) at Puttur, Dakshin Kannada District, Karnataka
- Enterprise support transaction to provide infrastructure services (A160c) at Sagar, Shimoga District, Karnataka
- Enterprise support transaction to provide infrastructure services (A160d) at Mysore, Mysore District, Karnataka
- Enterprise support transaction to provide infrastructure services (A160b) at Kundapur, Udupi District, Karnataka
- Enterprise support transaction to provide infrastructure services (A160f) at Raichur, Raichur District, Karnataka
- Enterprise support transaction to provide infrastructure services (A160h) at Davangere, Davangere District, Karnataka
First time draft – September 13, 2007
Project Photos
Project Financials
http://spreadsheets.google.com/pub?key=pwRdPi0mYDcLn6RaHFd72AQ
Project Details
This project is to develop multiple entrepreneurs in the state of Karnataka who will sell products in the infrastructure space to the bottom of the pyramid market. The customers of the products will be households and small businesses (petty shops, roadside hotels and bakeries). The products will be from one of the following sectors: telecom, energy efficiency, water, renewable energy, cooking and heating. To stock and sell the products, the entrepreneurs will be given working capital support from local banks. S3IDF will facilitate working capital support for the entrepreneurs from local banks by providing security in the banks in the form of fixed deposit. Wherever possible, the entrepreneurs will sell their products on a cash basis and where required financing for the products will be provided through local banks and micro finance institutions. In addition to providing the entrepreneurs financial support, S3IDF will provide business development assistance to the selected entrepreneurs.
To get scale economies, S3IDF could use its SPV, S3IDF Infra serve to buy products in bulk and then supply to the entrepreneurs. The products could include the following: pressure cookers, public coin phones, mobile phones, candle based water filters, LPG stoves, LED lanterns, solar lanterns, single phase flour mill etc.
Project Size Details
The working capital loan to be provided to each entrepreneur from a local bank will be between Rs. 100,000 to Rs. 200,000. It is expected that at least 10 entrepreneurs will be selected and supported for this initiative from July 07 to July 08. On this basis, the total project cost will be between Rs. 10 lakhs to Rs. 20 lakhs.
Details of the entrepreneurs are as follows
http://spreadsheets.google.com/pub?key=p
This project will provide employment to at least ten entrepreneurs
Each entrepreneur will reach an average of 20 customers in a month, in a year h/she will reach around 200 customers. So ten customers will reach 2000 customers
Estimated Pre-investment Costs
Total Costs – Rs. 432400
S3IDF costs
Personnel costs – Rs. 200400
Other costs – Rs. 40000
Total S3IDF costs - 240400
Consultant costs
Personnel costs – Rs. 160000
(two consultants at Rs. 10,000 per month for 8 months)
Other costs – Rs. 32000
Total Consultant costs - 192000
Returns for S3IDF Revolving Fund
Annual percentage returns for RF – 29%
Project Indicators
Investment indicators:
Investment size – Rs. 10,00,000
Revolving fund – Rs. 5,00,000
RF to investment size – 50%
Cost Indicators
Total pre investment cost – Rs. 4,32,400
Pre investment cost/Investment Ratio – 43%
Impact indicators
No. of direct beneficiaries – 10 (number of entrepreneurs)
No. of indirect beneficiaries – 2000 customers from 10 entrepreneurs
Investment size /no. of beneficiaries – Rs. 500
Project Risks
Project Owner/operator risk:
The risk of the entrepreneur who will be the project owner is the biggest risk of this project. The risk is that the entrepreneur misuses the support provided to him or proves to be incapable to deliver as per expectations. To reduce this, we will be following a rigorous selection process for selecting entrepreneurs. This will ensure only the most suitable are selected. Additionally, the support provided to the entrepreneur will be backed up by necessary legal documents so that immediate legal action can be taken if the entrepreneur does not go as per the agreed terms and conditions. Also, the performance of the entrepreneurs will be closely monitored on a regular basis (weekly).
Market risk:
Since we will be focusing on the bottom of the pyramid market, which is largely untapped, this risk will be less. In case at a particular location, such a risk arises, the products will be shifted to another location.
Technology risk:
We will be dealing only with such technologies where the risk is minimal. That is technologies selected will be commercially proven technologies
Portfolio risk:
No portfolio risk
Mission risk:
No mission risk
Partners
Entrepreneurs, local banks and manufacturers of products in the telecom, energy efficiency, water, renewable energy, cooking and heating sectors.
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