Project Dates:
Implementation Start: January 2008
Project Details:
This project concept involves reinvestment in an existing microenterprise unit for hawkers lighting in the town of Hiryur in Chitradurga District. In early 2007, S3IDF partner NGO Chaitanya set up a hawkers light point business in Hiryur and identified a local entrepreneur to run the project. Unfortunately, within three months, due to the entrepreneur’s problems with alcoholism, the project had to be shifted to a new entrepreneur, Mr. Basavaraj, in September 2007. Furthermore, because the batteries initially purchased for the project had been purchased cheaply from the informal market and had been improperly maintained by the first entrepreneur, they began to fail shortly after Mr. Basavaraj took over the project. Due to the loss in battery backup, this required Mr. Basavaraj to have to provide two—and sometimes three—batteries per night to each customer and required him to reduce his customer base (and turn away new potential customers) in the months of November and December.
The hawkers are situated along the main road in Hiryur, between the Ganesha Temple and main KSRTC bus stand, with several located on smaller streets and passages set off from the main road. There are approximately 40-50 hawkers along that stretch of road, selling prepared foods, fruits, vegetables, and flowers. About half use kerosene lanterns, while the other half relies on ambient lighting.
Charging of batteries is done by full grid charging. The charging station is located near the Ganesha Temple. Because the entrepreneur does not own or rent a vehicle of any sort, he must hail an auto rickshaw each night to make battery deliveries and pickups at a cost of Rs. 30 per night. Additionally, he uses his bicycle to check on customers and deliver replacement batteries during the course of the night. The entrepreneur, Mr. Basavaraj, was identified by Chaitanya, and is a relation of Mr. Chandrappa, a Chaitanya employee. Mr. Basavaraj supports his wife and four daughters, who range in age from 7 to 18 years. He is employed by day making deliveries for a local pharmacy on his bicycle, a job for which he earns Rs. 2500 per month.
Mr. Basavaraj has been given 20 new Shakti batteries, one new Digitech grid charging unit, and 15 new light points to be provided by Mr. Jayakumar, an S3IDF hawkers’ light entrepreneur in the Peenya area of Bangalore. In addition to this new equipment, the loan also covers 12 existing light points, one existing dry battery, and other equipment such as wires. Mr. Basavaraj is signing a hire-purchase agreement in which he will pay S3IDF for the cost of the equipment at a 14% rate of interest over a period of 36 months.
Project Financials:
http://spreadsheets.google.com/pub?key=pwRdPi0mYDcKWN6g-cGchCw
Project Size Details:
The entrepreneur will initially start servicing 15 hawkers. Mr. Basavaraj plans to expand the business to other hawkers and sections of Hiryur once the demand for the lights increases.
Project Impact Details:
The project will benefit the entrepreneur, who supports four children and currently holds a low-wage day job. Additionally, the hawkers will also benefit from access to convenient, affordable, and clean lighting.
Estimated Pre-investment Costs:
Total Costs- Rs. 6678
S3IDF costs
Personnel Costs – Rs. 4676
Other costs - Rs. 2002
Total S3IDF costs – Rs. 6678
Returns for S3IDF Revolving Fund:
14% returns on a reducing balance basis
Project Indicators:
Investment Indicators
Investment size – Rs. 71,050
Revolving fund – Rs. 71,050
RF to investment size – 100%
Cost Indicators
Total pre investment cost – Rs. 6678
Pre investment cost/Investment Ratio – 9%
Impact indicators
Number of direct beneficiaries – 16 (at the start of the project)
Investment size/no. of beneficiaries – Rs.3550 (71,000/20 beneficieries)
Project Risks:
Project owner/operator risk
Mr. Basavaraj has been operating the light point business under extremely adverse conditions (i.e., rapidly failing equipment) for three months. He has developed an understanding of the importance of customer relationships and has demonstrated responsibility and work ethic, thereby minimizing the risk.
Market risk
Many of the hawkers in Hiryur do not own any source of light at present and the risk might be that they may not be open to new source of light. The hawkers are not using lights because they find the cost prohibitive or may find the ambient light adequate. However, the lights are likely to find favour with more and more hawkers as they observe others around them making use of a new convenient, inexpensive, and non-polluting light source. In the current area covered by the entrepreneur, there may not be a large enough market to get the required number of customers to generate an adequate surplus in cashflows. However, at present, the entrepreneur only covers a small section of Hiryur, and will be able to expand to nearby markets relatively easily.
Technology risk
There is no technology risk as the batteries (Shakti batteries) and the light points designed by another entrepreneur, Mr. Jayakumar, are being used in other projects without any problems.
Portfolio risk
There is no portfolio risk.
Mission risk
There is no mission risk.
Partners:
The entrepreneur, Mr. Basavaraj, equipment suppliers (Shakti batteries, Mr. Jayakumar, Digitech) and partner NGO Chaitanya.
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