Project Dates:
Implementation Start: June 2009
Project Details:
This project is a restructuring of the Hawkers Lighting Enterprise in Nehru Market, Dharwad. This was an S3IDF self-owned and operated enterprise being run with 45 nos. of 3W Flexitron LED lights and Flexitron batteries. After extensive testing in the S3IDF Bangalore office, Flexitron light systems were originally chosen in order to experiment with providing a less expensive technology to hawkers at a lower nightly rate (Rs.10/night) to see if a poorer hawker community could be served. It was decided that S3IDF would own and operate the project on its own due to the fact that a new technology was being utilized and it would not be prudent to put the risk on a new entrepreneur. The project struggled and was ultimately underperforming after six months due to several key reasons:
- Technology - Flexitron batteries showed that they could not take the wear-and-tear of daily charging, delivery, and use by hawkers, leading to high maintenance costs. Flexitron was not fully cooperative with supplying needed spare parts in a timely fashion. NOTE: There is no inherent problem with the performance or customer satisfaction with LED lights per se, it is only a problem with unreliable batteries.
- Labor - finding trustworthy, dedicated and motivated workers to do this on salary basis in which they have no ownership or incentive for performance.
- Transportation - S3IDF's second-hand TVS vehicle does not get good mileage, and carrying batteries around the market by hand or cycle is too laborious, exacerbating our problems finding labor. We inquired about making a hand trolley, but this would be an expensive investment (costing Rs. 7000-12000 at least).
Additionally, there is also the fact of competition in the Dharwad market: Selco is also operating a large-scale hawker lighting enterprise in the Dharwad market, charging customers Rs.20/night. Due to S3IDF’s inability to provide a truly reliable service, 2-3 of our original LED customers (who at the time were not willing to pay more than Rs.10/night for lighting), are now opting for Selco lights because they have become adjusted to high-quality electric lighting.
Thus, we have made the determination that in the interest of preserving our presence in the Dharwad market and continuing a lower-cost lighting service for the poorest hawkers, we will transition Dharwad to a more proven model with CFL light points and lead-acid Sakti batteries, utilizing grid-based charging. Hawkers will be charged Rs.15/night for lights.
We will also solve the incentive problem with labor by doing a hire-purchase agreement with an entrepreneur. The selected entrepreneur is Shankar, who is already employed by S3IDF as a field worker for the Dharwad infrastructure supply chain shop. His wife runs a small NGO, Paripoorna Samsthe, and the enterprise will be taken in the name of the NGO and managed by Shankar and his wife. Charging will be done in the Paripoorna Samsthe office, located about 1km from the market. Batteries will be transported by auto and distributed by hired labor.
The initial anticipated market size is approximately 30, counting our current LED customers and a few new customers. We will be providing Shankar with 30 Sakti batteries and light systems plus one Digitek charger, which are already on stock in the Bangalore office. We are pricing the batteries and charger with depreciation, since they are a year old.
Project Financials:
Project Size Details:
The entrepreneur will initially start servicing up to 30 hawkers.
Project Impact Details:
The project will benefit the entrepreneur and poor hawkers in Dharwad market who originally had no lighting solutions or were utilizing expensive, polluting kerosene lamps.
Estimated Pre-investment Costs:
Total Costs- Rs. 6678
S3IDF costs
Personnel Costs – Rs. 3340
Other costs - Rs. 0
Total S3IDF costs – Rs. 3340
Returns for S3IDF Revolving Fund:
15% returns on a reducing balance basis
Project Indicators:
Investment Indicators
Investment size – Rs. 67,092.75
Revolving fund – Rs. 57,028.84
RF to investment size – 85%
Cost Indicators
Total pre investment cost – Rs. 3340
Pre investment cost/Investment Ratio – 5%
Impact indicators
Number of direct beneficiaries – 1 entrepreneur/30 customers
Investment size/no. of beneficiaries – Rs.2236
Project Risks:
Project owner/operator risk:
Shankar has had significant experience in managing and running our hawkers light project with the Flexitron equipment. He has been fully trained in maintenance of Sakti batteries. Paripoorna Samsthe, an NGO run by Sankar’s wife, will be owner of the project.
Market risk:
Market risk is minimal due to the fact that we were already operating an enterprise serving approximately 25 customers nightly with LED lights. Though competition is present in the form of Selco’s hawker lighting enterprise, our enterprise will be offering the same technology at a lower nightly cost.
Technology risk:
There is no technology risk as the batteries (Sakti batteries) and the light points designed by another entrepreneur, Mr. Jayakumar, are being used in other projects without any problems. Though the Sakti batteries are already a year old, they have been recently serviced by the manufacturer.
Portfolio risk:
There is minimal portfolio risk.
Mission risk:
There is no mission risk.
Partners:
The entrepreneur, Shankar Gali and NGO Paripoorna Grameena Abvruddhi/Mahila Seva Samsthe (PGAMS). Equipment suppliers Sakti batteries and Digitek Controls.
