Project dates
Implementation start: July 2007
Project details
This is a hawker’s light point business for vendors in Dasarahalli and Malleshwaram in Bangalore. The entrepreneur, Mr. Jayakumar, started operations in September 2006. Mr. Jayakumar began his business supplying about 30 hawkers in Dasarahalli with batteries and light fixtures for Rs. 15 per day. His business had dropped down to 18 customers in April 2007 due to competition. At that point, he began supplying lights to 6 hawkers in Malleshwaram as well.
Jayakumar obtained about 40 batteries from a small supplier in Bangalore (Vishal). Because of the low quality of these batteries and the fact that they only hold a charge for up to two hours, Mr. Jayakumar had to provide each customer with two batteries. Vishal has not provided a warranty on the batteries, as he claims the batteries have been damaged by current fluctuations. The light fixtures, provided by Mr. Vijaykumar (proprietor of S3IDF-supported light point business in Bomanahalli), were of similarly poor quality, with internal circuitry corroding and burning out.
S3IDF is restructuring the project to enable Jayakumar to recoup his business. S3IDF is purchasing 30 batteries for Mr. Jayakumar from Sakthi Electronics, a well-established supplier to compensate for the faulty batteries bought from Vishal.
Project Financials
http://spreadsheets.google.com/pub?key=pwRdPi0mYDcK4lKzA9Do6Ew
Project Size Details
The restructuring of A118 consists of the amount due from the earlier loan amount and purchase of additional 30 batteries at Rs 1875 each from Sakthi Batteries.
Project Impact Details
Mr. Jayakumar was formerly an auto driver. As his wife does not work, and he has two children in private schools, he has been working to increase his income in order to make ends meet and continue to meet his children’s educational needs. With the restructuring, Jayakumar will be able to revive his business and earn profits again.
The project will in turn impact Mr. Jayakumar’s clientele, consisting of petty shopkeepers and hawkers in Bangalore’s Peenya Industrial Area in Dasarahalli.
Estimated Pre-investment Costs
Total Costs – Rs. 5175S3IDF costs
Personnel costs – Rs. 4175
Other costs – Rs. 1000
Total S3IDF costs – Rs. 5175
Returns for S3IDF Revolving Fund
Annual returns of 5% for 3 years
Project Indicators
Investment indicators:
Investment size : Rs. 123907S3IDF
Revolving Fund: Rs. 123907
RF to investment size: 100%
Cost Indicators
Total pre investment costs – Rs. 5175
Pre-investment cost to investment ratio – 4%
Impact indicators
Number of direct beneficiaries – 30
Investment size per beneficiary – Rs. 4130
Project Risks
Project Owner/Operator Risk:
Jayakumar has been running the hawker light points business enterprise for more than a year. At preasent he is facing the risk of closure due to competition, faulty batteries and poor quality light points. However, with additional investment in good quality batteries and light points and efficient handling, he is confident of increased his customer base successfully.
Market risks:
Our key competition is from emergency lights (sold in lease towards purchase model) and street lights. Due diligence on the emergency lights indicates that significant portion of the hawker community have not bought it intentionally because they last for only 6 – 8 months, at most a year + due to the hawkers routine (need to procure vegetables early in the morning), they do not like carry it around as they would need to if they charge it at home. Those under the street light are expected to hire our lights anyway. Also these competitions are one of the reasons full grid is being taken up.
Technology Performance risks:
Technology performance risk is a factor. However, one of the primary purposes of selecting Sakthi Batteries is to minimize the chances of technology performance risks that come from less reputable, informal brands. Our experience shows that Sakthi batteries are more reliable than those from informal suppliers. The batteries come with a 2-year warranty.
Portfolio risks:
Since this is a repeat of the hawkers lighting project, it does represent a portfolio risk. However it is equally designed to capture greater returns.
Mission/Regulator’s perception risk:
The project is adequately pro-poor to pose no significant mission/regulator risk.
Partners
Sakthi Electronics, Mr. Jayakumar
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