Expansion of A165a-A165d Provision of infrastructure services at branchs in
a. A165a - Siruguppa, Bellary District, Karnataka
b. A165b –Nayakanahatti, Chitradurga District, Karnataka
c. A165c – Jaglur, Davengere District, Karnataka
d. A165d – Kanahosalli, Bellary District, Karnataka
Project Dates
Expansion Jan 08
Project Photos
Project Details
This project concept is to provide very Small Household Energy/Infrastructure Devices such as pressure cookers, water filters, solar lanterns etc. through S3IDF run infrastructure shops. Another variant of supplying these devices is to develop entrepreneurs through working capital support who will sell these devices to poor customers. The S3IDF run infrastructure shop concept started when S3IDF’s partner organization, CRWCWS (Chaitanya) completed several multiple projects of selling lights, pressure cookers and coin phones. The infrastructure shop started in the month of July 07 in Nayakanahatti. The earlier sales were considered as individual projects (A75j – telecom Chitradurga, A75k – pressure cookers in Nayakanahatti, A75l – mobile phones in Nayakanahatti, A75m – telecom Nayakanahatti). The sales were considered as a A165 project only from the month of October 07. The Nayakanahatti shop was the only shop running till the month of November 07. In the month of December 07, infrastructure shops were setup at three more locations: Jaglur, Kanahosalli and Siriguppa.
In addition to doing sales of infrastructure devices, these infrastructure shops will also do LPG connection financing (A75u) and also get other local S3IDF projects, such as A164-Siriguppa lighting).
Initially, the plan was to run the shops through S3IDF’s SPV, S3IDF Infraserve. However, since this was not possible, the sales are being planned to be done through a contract with S3IDF’s partner, Chaitanya. Chaitanya has got the necessary tax clearances (VAT) to do sales of the products. Chaitanya is doing this through a separate legal entity called as Chaitanya Enterprises which is a partnership firm. The contract between S3IDF and Chaitanaya is such that, Chaitanya’s contract employees will run the infrastructure shops. The expenses for running the shops will come from S3IDF. All profits that come from the shops will come to S3IDF.
The planned sales from January 08 till June 08 is given in the table below. To make the centers profitable, the centers will also sell other household kitchen items such as electric mixers etc. The required financing for conducting the sales will be given through a contract agreement to Chaitanya enterprises. Chaitanya will return all the monies with profit to S3IDF. In this expansion phase, S3IDF will provde Chaitanya with an amount of Rs. 4,04,250.
| Planned Sales from the S3IDF Infrastructure Shops | ||||||
| Jan-08 | Feb-08 | Mar-08 | Apr-08 | May-08 | Jun-08 | Total for 6 months |
| 100000 | 150000 | 175000 | 200000 | 250000 | 275000 | 1150000 |
Products Required
| Sl. No. | Product | No's | Price | Total Value |
| For Nayakanahatti, Kanahosalli and Jaglur centers | ||||
| 1 | Pressure Cookers | 100 | 500 | 50000 |
| 2 | Water filters | 60 | 700 | 42000 |
| 3 | Coin phones | 5 | 4000 | 20000 |
| 4 | Solar lanterns | 5 | 3600 | 18000 |
| 5 | Mud stoves | 50 | 150 | 7500 |
| For Siriguppa center | ||||
| 1 | Electricity mixer | 20 | 1525 | 30500 |
| 2 | Pressure Cookers | 25 | 650 | 16250 |
| 3 | Other Products | 50 | 400 | 20000 |
| | | | | |
| 1 | Other products for all centers | 200000 | ||
| Total | 404250 | |||
Investments required in the branches: Infrastructure is required at the branches. 3 bicycles are required at Nayakanahatti, Jaglur and Kanahosalli. One 2 wheeler is required at Siriguppa. Three tables are required at Jaglur, Kanahosalli and Siriguppa. 12 chairs are required at the above 3 centers.
Investments required at the infrastructure shops
| Item | No. | Price | Total |
| Bicycle | 3 | 2500 | 7500 |
| 2 wheeler(TVS 2nd hand) | 1 | 5000 | 5000 |
| Tables | 3 | 1500 | 4500 |
| Plastic chairs | 12 | 300 | 3600 |
| Total | 20,600 | ||
Project Cash Flows
http://spreadsheets.google.com/pub?key=p
Project Size Details
The centers will start with sales of Rs. 25,000 a month from January 08, which is a total of 1,00,000 from 4 centers. Out of the total sales, atleast 20% of the sales will be S3IDF products in the first month. This will gradually increase to 40% in the 6th month, when the infrastructure shops will be profitable. The total sales value for the first six months is expected to be Rs. 11,50,000 and the total value of S3IDF products is expected to be Rs. 3,90,000.
Project Impact Details
In the six months, the project will impact 675 households
Estimated Pre-investment Costs
Total Costs – Rs. 123,268
S3IDF costs
Personnel costs – Rs. 50,100
Other costs – Rs. 15,000
Total S3IDF costs – Rs. 65,100
Partner costs
Personnel costs –
Other costs
Total Partner costs - Rs. 58,168
The total partner costs is lower as part of the partner costs is covered from profits from the sale of non S3IDF products.
Returns for S3IDF Revolving Fund
Project Indicators
Investment indicators:
Investment size – Rs. 390000
Revolving fund – Rs. 390000
RF to investment size – 100%
Cost Indicators
Total pre investment cost – Rs. 123268
Pre investment cost/Investment Ratio – 32%
Impact indicators
No. of direct beneficiaries - 675
Investment size /no. of beneficiaries – Rs. 578
Project Risks
Project Owner/operator risk:
The project operator is Chaitanya who has done several projects with S3IDF and has an excellent track record. Based on this, the operator risk is minimal
Market risk:
This is the biggest risk of this project. The risk is that for the costs incurred the sales cannot be made and the shops do not reach sustainability in the planned 6 months. This concept has been tested in Nyaakanahatti shop for around 6 months and based on this expanded to 4 centers. The expansion is based on this learnings. Also, the concept will be tested for 6 months. At the end of six months it will be reviewed and continue if the performance is satisfactory
Technology risk:
There is no technology risk as the products that will be sold will be standard products
Portfolio risk:
There is no portfolio risk
Mission risk:
There is no mission risk
1 comment:
Isn't 'Appropriate financing' a part of these infrastructure shops as well? Isn't mentioned or maybe I missed it.
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