solar business plan

Downloaded from www.binodpandey.wordpress.com

Page | 1

Background

Clean energy is the need of today’s world. The world is suffering from the energy crisis and the existing

source of energy is too expensive. Fossil fuels are at its end stage and these fuels creating environmental

problems like global warming, climate change, etc. The whole world is moving towards renewable energy

sources which is cheaper and effective source of energy and solar power has stood in front as the solution

to it. New technology has been developed to trap the alternative sources of energy of which solar PV

technology is being mostly used worldwide to solve the present solution.

The increase in the load shedding in the context of our country Nepal is a major problem at present. There

is uncertain to solve this problem until we depend on the existing source i.e. hydroelectricity. So the time

has arisen to go for alternative like solar power. Most of the works in the government as well as private

offices, banks, hospitals, hotels, etc are stopped due to this growing load shedding. There is a need of

backup systems for them. At the household level, people are bound to stay in the darkness, apart from

news, television, radio, water pumping problem in the valley and so on.

In the next 10 years there is no chance of getting rid of load shedding in Nepal. Similarly, most of the

western part and hilly region of Nepal is not linked to the electricity grid. People living in those part are

under hardship life. Some sectors like vaccines refrigeration, hospitals instruments and equipments etc

essentially require electricity power for their operation.

The people are afraid of investing in Nepal in the industrial and manufacturing sector due to insecurity,

political instability, energy problems. They want quick return of their investment. Investment in the

hydropower, factories, projects, etc is a long term return.

Realizing all of these problem, establishment of more Solar Companies is essential in Nepal. The market

is growing up as well. At present Solar business in Nepal is like a hot cake. More number of solar

companies providing efficient solar PV system is to be established to solve the present problems. So with

these objective, this venture is proposed.


Page | 2

Introduction

Solar Energy Company Pvt. Ltd. is a form of organization which deals with the installation and operation

of various systems to solve the problems of energy crisis in the present situation. It provides back up

system in the present load shedding problems with minimum investment and long run benefit. It is

situated at pulchowk, Lalitpur. The company will start its business from installation of Solar home

system and expand its business to total solar solution in future.

A. Company name, address and phone number

Company name: Solar Energy Company Private Limited

Address: Pulchowk, Lalitpur

Contact no: 015573456

Email: solarenergy_pvtltd@yahoo,com

www.solarenergy.com

B. Management Team

SEC will have six key personals in the company who are the co-owners and also designated

officers of the company.They are:

1. Miss Nisha Jaishwal

Address:

Temporary: Chakupat, Lalitpur

Permanent: Malangwa, Sarlahi

Mobile: 9841517907

Email: [email protected]

Designation: Director

2. Miss Sabina Uprety

Address:

Temporary:New Baneshwor,ktm

Permanent: NewBaneshwor,ktm

Mobile: 9841695194

Email:[email protected]

Designation: Sales and Marketing Manager

3. Mr. Santosh Mandal

Address:

Temporary: Patandhoka, Lalitpur

Permanent: Janakpur, Dhanusha

Mobile: 9803594998


Designation: Finance Manager

http://www.solarenergy.com/


Page | 3

4. Mr. Sanjog Kayastha

Address:

Temporary: Ason

Permanent: Ason

Mobile: 9841422203


Designation: Accountant

5. Mr. Narayan KC

Address:

Temporary: Lokanthali

Permanent: Lamachaour, Kaski

Mobile: 9849123943


Designation: Opearation and Installation Manager

6. Mr. Surya Kiran Koirala

Address:

Temporary: New Baneshwor

Permanent: Kawasoti, Nawalparasi

Mobile: 9841861294

Email:

Designation: R & D Manager

All the team members are young, energetic and educationally sound. They are from different location

with their own culture environmental and religious backgrounds which will enhance our team work.


Page | 4

I Executive Summary

A. Solar energy company’s Business, Services and solutions

Solar Energy Company Private Limited presents the market with reliable, cheap and convenient solar

solutions for the people suffering from load shedding problems. Our company deals with all parts of solar

components and we basically serve solar facilities from survey to installation. SEC focuses on

present load shedding crisis and promotion of green energy in our country.

Our service will work out on installation and maintenance of solar energy mainly on urban area.

Promoting renewable energy our company will limit the uses of non renewable energy which

will be environmental friendly.

B. Solar Energy Company’s Market

Initially SEC has targeted the Kathmandu Valley residents as primary customers. Offices and

apartments are also among our customers. Kathmandu valley uses most of the electrical energy

in Nepal. Due to load shedding problem, people are rundown from their social and professional

life. This problem will be solved by our product and services. Our targeted customers have

knowledge about solar energy and its benefits.

Besides Kathmandu valley, we intended to expand our services outside the valley in near future.

C. Competition and marketing Strategy

There are around 60 companies which are directly and indirectly related to our business. Among them 30

companies focus toward rural areas and associated with government, so they are not head to head

competitors. The remaining are companies which focuses on large organization and residents in the urban.

Since our company will be in large scale, we will adopt cost leadership marketing strategy. To

promote our company different media like Advertisement media, newspapers, Business

magazines and Internet will be used. Besides we’ll be focusing on increasing the publicity of our

business through activities like: sponsoring in public Medias, organizing campaign, supporting

green energy program. Our company will provide flexible service to our customers in financial

context by providing installment facilities. Since our company will provide small to large scale

solar power installation, it will attract more customers with different potential. Our company’s web page

will provide guidance and instruction to customer regarding our product and services which will make

easy access to our company.

D. Financial forecast

SEC company requires capital of NRs. 2500000 for the startup of its business. The amount includes

administration, overhead, marketing costs and also meet short term working capital needs. The capital

will be generated by equity of each of partners. The breakeven point is obtained at 177 units for the

starting year.


Page | 5

II. VISION AND MISSION STATEMENTS

A. Vision statement

‘to change Nepal Into a nation where solar energy provides power to everyday needs.’

B. Mission statement

The mission of Solar Energy Company Private Limited is to increase the quality of life of people of

urban areas by eliminating the problems created by load shedding. For this, SEC provides high tech, high

quality green energy alternative to home or office use.

Ç. Values and Principles on which business stands

✔ Load shedding should not be a problem to any person.

✔ Solar energy is a precious gift and we should take maximum benefit from it.

D. Competitive Advantage

SEC Company possesses significant competitive advantages over its competitors because of the

following reasons:

•Installment facility is provided so that everyone can afford solar electricity.

•Run by electrical engineers so that each customer’s energy needs is precisely calculated

to gain maximum efficiency.

•Proper customer care is provided by warranty and repair facility.

III. BUSINESS AND INDUSTRY PROFILE

A. Stage of growth : The solar electrification companies of Nepal at present are at an infant stage. It

is in introductory stage but consciousness as well as needs of people is increasing at a good rate

and the existing companies are getting popular among upper class of residents. We think at this

rate, the popularity and the use of renewable energy will increase.

Our Company SEC is in the start up phase of business. As initial market we’ll serve the

residential customer and offices. Then we will proceed to large organizations and apartments after getting

publicity.

After covering our initial market, we are likely to attract the customers outside the valley.

Besides we are planning to expand our firm that deals only with parts of solar products.

B. Company Goals and Objectives

Goal: Our goal is to become the number one company in solar electricity business.

Objectives:

•To reach a target of installing 80 solar panels within the first 5 months.

•To spread our service out of valley within second year


Page | 6

C.Registration of the Company

According to the Company Act 2063:

This company is a partnership form of organization consisting of six members as partners. All the rules

and regulations according to the general partnership organization are strictly followed. The company will

be registered under the act of Small Scale Industry and is dedicated to fulfill all the rules, regulation and

norms of the governing laws and rules. The documents required for registration process are as follows;

a) Registration Form

b) Duplicate of the citizenship certificate of all members

c) Two pieces of passport size photos of all members

d) In case of rented building, the legal contract with the owner of the building

e) Legal contract among the parties to follow the act as per the general partnership

f) Plans, policies, act, rules and regulations of the company to be followed by the owners and the

employees and articles of the company

As the company’s total initial investment is about Rs.2500000. Hence, the registration fees that

should be deposited is Rs 16000.

Apart from registration, the company is bounded by various other laws and regulations under the

Company Act 2063 in terms of operation too. The company vows to abide by these laws and

ensure that operation is in accordance to them and no breach occurs.

D. Industry analysis

1) Industry background and overview

The first commercial renewable energy company of Nepal was lotus energy founded on 1993.Till now

there are about 60 companies which deal with solar energy. But among them, about 30 companies work to

provide energy to rural areas only and they are prequalified by Alternative Energy promotion centre

(AEPC), Khumaltar, Lalitpur. They are NGOs and are funded by various rural development projects. The

remaining also take rural areas as their primary target but they deal with urban areas as well. We are the

company to take the urban areas as the primary consumers and this can be a real opportunity. The demand

for green alternative energy in urban is constantly increasing as people are having a hard time coping with

the problems caused by load shedding crisis.

To tackle the load shedding crisis, there are companies which are providing other forms of solutions such

as generator services and inverter services. For these solutions, the consumer must spend constantly on

running costs such as cost for fuels and maintenance. Due to this high running cost, people in urban areas

want something that is hassle free, and cheaper in long term. So they will be attracted to our services.


Page | 7

2) Significant trends

The trend of existing renewable energy companies is to collect money from different rural development

projects. None of the existing companies focuses on urban areas and hence they are untapped

opportunities.

3) Growth rate

Currently lotus energy installs 15-20 systems per month in urban areas and this number is increasing even

though lotus has no advertisement campaigns. This shows that this rate will increase once people are

aware of the availability of such systems. Moreover, the main reason for people not being attracted to

solar systems is due to the initial high cost. From our installment provision, people will not be burdened

by initial high cost and hence sales will increase.

4) Key success factors In the industry

•Load shedding:

It has become a huge burden on the life style of urban people. People need other sources of energy to do

their jobs as well as for recreation. Also, load shedding problem is forecasted to continue and grow till the

next 10 years. So sooner or later, people will search for alternative sources.

•Renewable source of energy:

Solar energy is renewable source of energy and due to this reason customers are not burdened by any

running cost. Once they install the system, they get energy for their lifetime without having to pay any

penny.

•Pollution free energy:

Photovoltaic (PV) modules (Solar Panels) gives free and environment friendly electricpower whenever

we want it. PV modules generate electricity directly from sunlight and their operation is completely noise

and pollution free. Because they have no moving parts to wear and tear, they will provide reliable power

for decades.

5) Outlook for the future

Presently in many developed countries, there are laws which enable people to sell excessive electricity

generated from solar home systems to their regional electricity company. Similarly, such types of laws are

being discussed to be applied in Nepal. This process might be completed in the coming few years. So

after few years, demand for our products will increase rapidly.


Page | 8

IV. BUSINESS STRATEGY

A. Desired Image and Position in the Market

We would like to stand out in the solar market through our service and product reliability. We want to be

the customer’s first choice by creating positive public image through different media. We want to create

an image of a company which provides green energy at cheap and easy installment facility.

B. SWOT Analysis

SWOT Analysis for SEC is done as follows:

1. Strength

•Good quality of service

•Strong public relationship

•Highly skilled manpower

•Understanding and Unity among the partners

•Strong relation with the manufacturers

2. Weakness

•Inexperience

•Inadequate information about customer’s needs

3. Opportunities

•Load shedding

•Target customer are unsatisfied with current available services

•Promotion of renewable energy from government level

•Subsidies and tax credit on the solar products

4. Threats •Political instability

•Existing competitors

C. Competitive Strategy

The type of strategy we employ to create a market share for our company is focus strategy. We will focus

on the class of people who need electricity for their daily works, the class of people who are having a

really hard time to deal with the current load shedding problems.

By the time competition grows, we will have enough market shares and a distinct brand image.

To attract such customers we will engage in advertisement campaigns which will educate people to use

green solar energy, campaigns which will explain the long term benefits of using our systems than using

generators.


Page | 9

V. Company product and services

A. Description

1. Product or Service features

Complete solar home system customized to customers’ demands.

For this category of products, we will first survey the site and then calculate the required power and its

cost. The requirement of different customers may vary. It will include the following components:

•Photovoltaic cells (PV): it is the source of energy, it will convert solar energy into electrical energy. We

will provide PV cells from Shell-Solar, the largest manufacturer of solar panels in the world. The rating of

such panels will vary from 20watts-peak to 200watts-peak.

•Charge controller: it will be used to control overcharge and over discharge of battery

which will increase battery life.

•Heat shrink: helps to overcome overheat of problem of battery

•Battery isolator: it will help to run system directly from solar panel after battery is

fully charged.

•Cable

•Battery: it is deep cyclic sealed lead acid battery from Kulyan , Volta which is also deep cycle tubular

solar battery.

Installment of solar panels only (for customers)

From our survey, we have found that about five percent of total population in valley has been using

inverters. Customer with this category would need solar panel only. Hence we will install particular solar

panel that will match with their system.

2.Customer benefits

✔ First of all the customers are facilitated by services that are customized regarding their

needs and perspectives.

✔ Installment facility will make them comfortable with financial context.

3.Warranties and Guarantees

For the first two years following your PV system installation, Solar energy provides you a full

installation warranty. During the period, Solar Energy will provide regular site visits for cleaning

and maintenance of the system, and also field any other support issues. The company shall provide its

customers with guaranties and warranties for every component. Failure of any guaranteed component will

be repaired or replaced immediately on request (any physical hampers will not be repaired).

4. Uniqueness

Customized system with respect to customers’ perspective is first key point of our company which will

satisfy variable needs of our customer.


Page | 10

5. Free Energy Audit

Our process begins with a free energy audit of your building, whether it is a small residential home, or a

large commercial complex.

A member of our engineering staff will evaluate each and every electricity consuming device in your

building and also go through your past electricity bills to determine how much electricity you need on

average during a given day. We will also ask you to prioritize the appliance usage in terms of how

critically do you need them during load-shedding hours

B. Patent or trademark protection

SEC will be register under the Ministry of Industry and Commerce as a service oriented business. It will

be a registered as a partnership company in Lalitpur Municipality. SEC will be legally approved after its

registration and imitation of our trademark will be punishable as per the Ministry of Industry and

Commerce.

C. Description of Service process

SPL believes in promoting green energy as well as increasing solar users. SEC creates

opportunities for customer to get benefits of solar energy in appropriate costs.

Ordering & Payment Procedures:

What are the ordering procedures?

1. Contact

In order to get our service, one needs to contact in our office. Our advertisement means shall help our

customers to get details of offices.

2. Selection of services

Our web page, www.sunpowersolution.com features various products available and our services. The

customers can also search the product description and warranty we provide. They can be updated with

services we provide through our web page. The customers can select the types of the service they want.

3. Pricing

Pricing of the services will be mentioned in both in Nepalese as well as US Dollar in our webpage. For

convenience customer can directly contact in our office.

Payment methods:

The payment is divided into full payment and installment basis:

Full payment: customer has to pay immediately after the installation of system.

Installment basis: This payment method is valid for all customers. Customer have to make fifty

percent down payment at first after installation then customer shall pay in installment basis with

interest to finance company.


Page | 11

D. Future Service offerings:

We are planning for adding the services which will target offices and small hotels. SPL has plan

to deploy this service after two years of establishment of company

VI MARKET STRATEGY

A. Target Market

1)Complete Demographic Profile:

The idea of SEC came due to the emerging market solar energy in Nepal. Every year thousands of

Nepalese are attracted toward particularly solar energy in the middle of alternatives energy sources. They

want to serve by solar energy to get relieve from load shedding and electricity crisis.

Table: total population and targeted customer

YEAR POPULATION % POPULATION

2007 39,51,423 5.2%

2008 41,01,817 5.7%

2009 45.67.565 6.5%

2) Electronics equipments

List of Mostly used electronics equipments

S.N. Lists of Electronics Equipments

1. CFLs (Tube Lights)

2. Computer

3. Laptops

4. Mobile Chargers

5. Television


Page | 12

Our Solar Home Systems and Costings

20 Wp System

S.N. Particulars Capacity Quantity Cost(Rs) Selling Price(Rs) Remarks

1 Panel 20wp 1 3200 6000

2 Battery 35Ah 1 4000 5250 2 CFL of 5 watt each( 4 hours)

3 Charge Controller 8Amp 1 1400 1500

1 CFL of 3 watt( 4 hours)

4 DC/AC Converter 20w 1 1400 1500 1 LED light( 4 hours)

5 Structure 1 800 1500 Mobile charge

6 Installation 3000

7 Miscellaneous 1500 2000

Total 12300 20750

60 Wp System

S.N. Particulars Capacity Quantity Cost(Rs) Selling Price(Rs) Remarks

1 Panel 60wp 1 9600 18000




4 DC/AC Converter 60w 1 1700 1800 3 LED light( 5 hours)

5 Structure 1 800 1500 Mobile charge

6 Installation 3000 Internet Router


Total 23600 37950


Page | 13

80Wp System Hybrid

S.N. Particulars Capacity Quantity Cost (Rs) Selling Price(Rs) Remarks

1 Panel 80wp 1 12800 24000


3 Charge Controller 10Amp 1 2000 2250 3 CFL of 8 watt( 5 hours)

4 Inverter 600 VA 1 12000 14843 3 LED light 1 watt ( 5 hours)

5 Structure 1 800 1500 2 CFL of 3 watt (5 hours)

7 Miscellaneous 2500 3500 Router & Mobile Charge

Total 51100 71593

80Wp System

S.N. Particulars Capacity Quantity Cost(Rs) selling price(Rs) Remarks

1 Panel 80wp 1 12800 24000




4 DC/AC converter 60 watt 1 1700 1800 3 LED light 1 watt ( 5 hours)


6 Installation 3000 Mobile charge (2 hours)

7 Miscellaneous 2000 3000 Router (2hours)

Total 33300 52300

Discount 5% 2615

Grand Total 49685


Page | 14

100Wp System

S.N. Particulars Capacity Quantity Cost (Rs)

Selling Price(Rs) Remarks

1 Panel 100wp 1 16000 30000


3 Charge Controller 10Amp 1 2000 2250 2 CFL of 7 watt( 5 hours)

4 Inverter 800 VA 1 15000 17316 3 LED light 1 watt ( 5 hours)


6 Installation 3000 TV/Computer (3 hours)


Total 62700 88216

Discount 5% 4410.8

Grand Total 83805.2

200 Wp System

S.N. Particulars Capacity Quantity Cost (Rs) Selling Price(Rs) Remarks

1 Panel 200wp 100*2 32000 60000

2 Battery 300Ah 150*2 45000 51000 6 CFL of 11 watt each( 5 hours)

3 Charge Controller 20Amp 1 9000 9750 TV (3 hours)

4 Inverter 1400 VA 1 28000 30000 Laptop charge (2 hours)

5 Structure 1 2400 3000 Computer (2 hours)

6 Installation 3500


Total 119400 161250

Discount 7% 11287.5

Grand Total 149962.5


Page | 15

B. Customer’s Motivational Factors

The concept of solar energy is not new among the Nepali customers. According to our market survey,

most of our targeted customers are familiar with solar power installation and their benefits. Majority of

customers have positive thinking towards our business idea. We have summarized some factors which

help to motivate the customers to use our services. The significant customer’s motivational factors are:

1. Better alternative source of energy

In the long run, solar electricity is cheaper than buying it from the power company. There is a

start up cost, but then it starts paying for itself. Once you break even, everything after that

is profit.

2. Giving customer what they want

There is a huge variety of solar panel systems available. Some can cost tens of thousands of

dollars, and some cost just a couple hundred. This means customer can get into solar, with their

respective financial effort.

3. Environmental aspects:

Solar Energy is clean, renewable (unlike gas, oil and coal) and sustainable, helping to protect our

environment. It’s not affected by the supply and demand of fuel and is therefore not subjected to

the ever-increasing price of gasoline.

B. Market Size and Trends

1)How large is the market?

Solar energy market in Nepal is in growing stage. The location of the company is in Pulchowk,

Lalitpur which shares major part of population. Since it is capital city, most of the people are

familiar with benefits of solar energy. This location shares major targeted customer which will be

beneficial for our service. Targeted customers have started to use these types of services in

Kathmandu valley. Since this type of service is in developing and progressive stage, SEC will

catch the present trend customizing the service with customers’ needs.

2) Is it growing or shrinking?

There are few companies who are directly related to our services. We are the competitors in this

market. Customers preferring solar energy are increasing day by day. Due to its advantages,

people are more likely to have solar energy in their house and offices. Since our targeted

customers are familiar with solar energy and its merits, it is more liable to increase in market.

Hence our targeted market is in growing stage.


Page | 16

D. Advertising and Promotion

The advertisement is depending upon the target customers; where are they? How should we communicate

with them? SEC is going to answer these questions with the effective advertisement and promotion

techniques. This section includes a description of all advertising means and medium we are planning to

use as well as public relations program and promotional materials (such as brochures).

As we have focused in Kathmandu valleys’ customer in initial stage, we will use following media for

advertisement:

1. Media to be used

We are planning to use two types of Advertisement; viz. Offline and Online advertisement. We mainly

focused on offline than online advertisement.

i. Offline Promotion:

Newspaper:

News paper is a good source of communicating with the potential customers, especially of age group

20- 40 years. Our targeted customers prefer the English newspapers like The Himalayan Times, The

Kathmandu Post, and Nepal Times. We will advertise our company service, contacts, features and website

in those papers. As our allocation of cost for offline advertisement is high, the advertisement will be

weekly or may be monthly.

Magazines:

Another effective means of advertising for our company is magazines which has wide reach to the

target customer. Magazines offer long life span resulting in good chance of being seen several times.

Magazines ads are usually of high quality, resulting in strong visual appeal. We will use business

magazine like The Times Nepal, which are more preferred by our customer.

Brochure:

Our company publishes a brochure annually including all the activities of the company. Brochure

helps to make customer up to date about income and expenses of the company. The report of seminars

and interaction programs held in the year is published in it. A strong brochure can be the back bone to

reflect the positive feedback from customer for an institution. So we are planning to invest enough capital

to publish own brochure.

Public Relation:

To increase public relation, we will organize program to create awareness about alternative energy.

This type of program will help to raise our company status in public perspective and different media

covering the program will help recognition of our company existence. This will also help to make

relationship with different professional and expertise of different fields.


Page | 17

ii. Promotion through internet:

Since our targeted costumers are use to with internet, SEC shall be focusing in advertisement through

internet. We will use web page of our company that are cost effective but reach the large number of

customer.

2. Frequency of usage

We are mainly focusing in offline advertisement so our company will be updated in news and magazines

regularly. News paper will be used weekly and magazines fort nightly. Costs for newspaper and

magazines are noted in table below. Our web page will be updated time to time.

Desired Image in the market

We will like to see SEC next to leading companies like Lotus in national market and next to some

international companies like Solar Shell in few years. We will like to establish a strong brand image by

the consistent quality services. As our vision we will always try to deliver value to our customers,

employees and to our nation as well.

VII. COMPETITORS ANALYSIS

A. Existing Competitors

1. Competitive Profile Matrix

Major competitors: These competitors are the giants of online shopping in Nepal. They are:

1.Kevin solar solution

2.Swogun Energy PVT. LT

Swogun Energy PVT. LT

•Business type: manufacturer, retail sales, wholesale supplier, importer

•Product types: Solar Home System, Portable Power Pack solar system system, solar

batteries, charge controller and others.

•Service types: consulting, installation, project development services, research services,

site survey and assessment services, contractor services, maintenance and repair services

Kevin Solar Solution:

•Business type: manufacturer, exporter

•Product types: backup power systems, DC to AC power Inverters sine wave, Batteries

Deep Cycle, SMF Batteries, Solar Water Heating Systems, Solar Lighting Systems, Online UPS,

Automatic Lift Backup System, IGBT Based Home UPS, CFL Lights, Cyber H-UPS, Sine Wave Inverter,

Sine Wave UPS, DSP Sine Wave H-UPS, DSP Sine Wave Inverter, DSP Sine Wave Online UPS, DSP

Sine Wave Static UPS.

We have constructed the CPM of Kevin Solar solution, Swogun Energy PVT.LTD and SEC as following:


Page | 18

Table: Competitive Profile Matrix (CPM)

Key Success Factors

Kevin Solar

Solution

Swogun Energy

PVT SEC OUR

Weight Rating Score Rating Score Rating Score

Innovative Services 0.1 4 0.4 2 0.2 4 0.4

Price Competitiveness 0.2 1 0.2 2 0.4 3 0.6

Financial Strength 0.1 4 0.4 2 0.2 3 0.3

Service Quality 0.4 4 1.6 3 0.6 4 1.6

Customer Trust 0.2 3 0.6 3 1.2 2 0.4

Total 3.2 2.6 3.3

2. Strengths and Weakness of competitors

The major competitors are the established companies. They have established their service image

and they have good technology and financial strengths.

Kevin Solar solution

Strength

•Strong brand name

•They are manufacturer

Weakness

•Expensive delivery charge

•Slow delivery process

Swogun Energy PVT. LT

Strength

•Strong brand name

•Unique R&D deparment

Weakness

•location

•low interaction with customers

B. Potential competitors

Solar home installation company is medium scale company. So, there will always be possibility of new

competitors. Our potential competitors will be those who will focus on installation service only in

particularly in Kathmandu valley. Some of the potential customers are:

Kinetic Energy Pvt. Ltd.

•Business type: wholesale supplier

•Product types: solar lighting systems, batteries lead acid deep-cycle, solar charge

controllers, DC lighting, solar water pumping systems, batteries lead acid flooded, retails

sales, wholesale supplier, design.

•Service types: consulting, contractor services, research and development


Page | 19

Nepal Energy Development Company (Pvt.) Ltd. (NEDCO)

•Business type: retail sales, wholesale supplier

•Product types: appliances, custom batteries, water heating systems, sun concentrating

photovoltaic systems, photovoltaic modules, compact fluorescent lighting, Compact

Flourecent Lamps (CFL), Complete Solar Home Systems, Complete Solar Water Heating

Systems.

•Service types: consulting, installation

•Address: Bharatpur-10, Chaubiskothi, Chitwan, Narayangarh, Narayani Nepal 26,Bharatpur

Lotus Energy Pvt. Ltd.

•Business type: Manufacturer, Wholesale, Supplier, Retail Sales, Service, Installer

•Product types: Complete Solar Energy Systems, photovoltaic modules, rechargeable

batteries, Power backup systems, Solar charge controller, Solar pumps, Solar

Tukis(alternate to kerosene lamp), Solar LEDs, Solar prayer wheels, Solar ozone water

purification systems, etc. .

•Address: P. O. Box 9219, 1679 Thirbam Sadak 3, Bhatbhateni, Kathmandu, Bagmati

Nepal

•Telephone: +977 (1) 441 8203

•FAX: +977 (1) 441 2924

Impact on our business:

They are potential competitors with similar services we provide. If they plan to target in our customer and

location under these circumstances we will lose our potential customer. As well as, market will saturate

before than we estimated.

VIII. DESCRIPTION OF MANAGEMENT TEAM

SEC is partnership business organization which will be owned and manage by its three partners.

The three partners will jointly share the ownership of the business and they will have equal

amount of equity, profitability and all of these members hold equal decision making authority.

SEC will operate with four departments—Research and Development Department ,Installation and

Operation Department , Sales and Marketing Department and Finance Department , at the office which is

based in Pulchowk, Lalitpur.

The partners are responsible for one department and they will make the decisions on their respective

department and the major decisions of the company will be jointly discussed.


Page | 20

3.Salary Structure of staffs:

no of staff salary per month

Director 1 25000

sales and marketing manager 1 20000

operation & Installation manager 1 20000

R & D manager 1 20000

Finance 1 20000

Marketing & Sales officer 1 10000

Office management 1 10000

Repair and maintence 1 10000

Engineer 1 20000

Techinician 1 15000

helper 1 6000

Accoutant 1 10000

receptionist 1 6000

total 13 192000

We designated the salary structure such that the employees do not have to make any compromise in their

self-esteem.the salary scale is equally divided from top to bottom level of management. At the end of the

year profit is shared among the three owners of SEC.

IX. PLAN OF OPERATION

A. Form of ownership

SEC will be operating as a partnership firm. All the six partners will jointly share the ownership of the

business and they will have equal amount of equity, profitability and all of these members hold equal

decision making authority. All the partners will be actively involved in the day to day operations of the

business. The partners have the responsibilities in three departments. The main reason for operating as

Partnership business is to establish such a business that is strong in financing and management.

Six partner viz. Miss Nisha Jaishwal, Miss Sabina Uprety, Mr. Santosh Mandal, Mr. Sanjog Kayastha,

Mr. Narayan KC, Mr. Surya Kiran Koirala will jointly invest the equity capital of Rs.1500000 . The

sources of equity financing of the partners will be personal savings and their friends and family members.


Page | 21

B. Structure of the Company

C. Decision Making Authority

All the six partners of the SEC will have equal authority to make decisions. The partners are responsible

for one department and they will make the decisions on their respective department and the major

decisions of the company will be jointly discussed. All the major decisions of the company must require

the consent of each member.

D. Compensation and Benefits Packages

As our mission “Solar energy is a precious gift and we should take maximum benefit from it.”,

we will never compromise in the quality of our service. The customers can check the condition

of the service installed and they can complain if unsatisfied with our work. We will always

remember “the customer’s satisfaction is our motto” during our business.

Director

Sales & Marketing Manager

Installation and operation Manager

R & D Manager

Marketing and sales Officer

Finance Manager

Repair & maintenance Officer

Technician

Helper

Research Engineer

Accountant

Receptionist


Page | 22

FINANCIAL FORCASTS

A. Financial statement

1.Fixed Assets

S.N. Particulars Qty cost per unit total cost

1 furnishing and decoration 1 100000 100000

2 computers 3 30000 90000

3 telephone 2 4000 8000

4 printer and fax 1 40000 40000

5 scooter 2 150000 300000

6 water filter 1 4500 4500

total 542500

2. Pre operating costs

cost

1 market survey 30000

2 Awarness Programme 30000

3 Training 40000

4 company registration 16000

5 R &D 100000

6 Miscellaneous 5000

total 221000

3.Operating Costs

Particulars First year Second year Third Year

per month per month Per Year Per month Per Year

Rent 25000 300000 30000 360000 30000 360000

Salaries 192000 2304000 218000 2616000 218000 2616000

Telephone 2500 30000 2650 31800 2650 31800

Electricity cost 2000 24000 2200 26400 2200 26400

Transportation 7000 84000 8000 96000 8000 96000

Internet charges 1017 12204 1017 12204 1017 12204

Advertisment 80000 960000 70000 840000 60000 720000

Stationary 2000 24000 2000 24000 2000 24000

Auditing 10000 10000 10000

Other miscellaneous 1000 12000 18000 18000

Total operating costs 3760204 4034404 3914404


Page | 23

1. Pro forma Income Statement

Income Statement of Solar Energy Company Private Limited (in Rupees)

First Year Second Year Third Year

Net Sales Revenue 22673306.04 25765120.5 28856934.96

Cost per installation 17042520 19366500 21690480

5630786.04 6398620.5 7166454.96

last year inventory 0 875900 875900

5630786.04 7274520.5 8042354.96

Operating Expenses

rent 300000 360000 360000

salaries 2304000 2616000 2616000

telephone 30000 31800 31800

electricity cost 24000 26400 26400

Transportation 84000 96000 96000

internet 12204 12204 12204

advertisment 960000 840000 720000

stationary 24000 24000 24000

Auditing 10000 10000 10000

other miscellaneous 12000 18000 18000

Total Operating Expenses 3760204 4034404 3914404

1870582.04 3240116.5 4127950.96

Depreciation

Computer 9000 8100 7290

Furniture 10000 9000 8100

Fax & Printer 3000 2700 2430

Electronic applainces 1500 1350 1215

scooter 7000 6000 5000

Total Depreciation 30500 27150 24035

1840082.04 3212966.5 4103915.96

Inventory 875900 875900 900000

964182.04 2337066.5 3203915.96

Tax (13%) 125343.6652 303818.645 416509.0748

Net Income 838838.375 2033247.855 2787406.885


Page | 24

Sales and profit statement

Sales Profit

1st year 22673306.04 838838.3748

2nd year 25765120.5 2033247.855

3rd year 28856934.96 2787406.885

Forecasts profits of first three years


Page | 25

C. Pro forma Balance Sheet(at the end of first fiscal year)

Assets Current Assets

Cash 838838.4

Account receivable 0

Prepaid expenses 0

Inventory 875900

Total Current Assets 1714738

Fixed Assets

Furniture 100000

Less accumulated depreciation 10000 90000

Computer 90000


Fax & printer 40000


Electronic appliances 12500


Scooter 300000


Total Fixed Assets 505000

Total Assets at the end of the year 2219738

LIABILITIES

Current Liabilities

Account Payable 0

Salaries Payable 0

Advertisement Payables 0

First Asset 542500

Preoperating cost 221000

Partners capital 1456238

Total Current Liabilities 2219738


Page | 26

Cash Flow Statement:

Particular Pre-operating First Year Second Year Third Year

Cash Inflow

Equity 1456238.37

last year inventory 0 875900 875900

Sales 22673306. 25765120.5 28856934.

Total Cash Inflow 1456238.37 22673306. 26641020.5 29732834.9

Cash Outflow

Pre=operating expenses 221000

(Purchase of fixed assets) 542500

Cost per installation 17042520 19366500 21690480

operating expenses 3760204 4034404 3914404

Inventory 875900 875900 900000

tax 125343.66 303818.645 416509.074

depriciation 30500 27510 24035

Total Cash Outflows 763500 21834467. 24608132.6 26945428.

Net Cash Flows 692738.375 838838.37 2032887.85 2787406.88

Cash Balance in the beginning

Borrowing/Repayment 692738.37 1531576.75 3564464.6

Cash Balance at the end 692738.375 1531576.75 3564464.605 6351871.49

Breakeven Analysis:

First Year Second year Third year

Fixed cost 3760204 4034404 3914404

Cost price per unit 64555 64555 64555

Selling price per unit 85883.725 85883.725 85883.725

Breakeven point in unit 176.2976455 189.1535476 183.5273323

Breakeven point=fixed cost selling price per unit-variable cost per unit

Hence after sales of 177 units, we will go into profit.


Page | 27

B. Ratio Analysis:

1. Net profit on Sales ratio:

Net profit on Sales ratio = Net profit ÷ net sales

Net profit 838838.3748 2032887.855 2787406.886

net sales 22673306.04 25765120.5 28856934.96

Profit sales ratio 4% 8% 10%

Conclusion

After deducting all the expenses, 4% of each sales rupees remains as a profit for us in the

first year. Then in second year due increase in expenses in addition of rooms and human resources,

it is decrease to 8% of each sales rupees. After third year, it will increase to 10% of

each sales rupees as no more additional expenses will be added. In other hand advertisement

expenses will be deducted after second fiscal year.

2. Net profit to equity (Return on Investment Ratio)

Net profit to equity Ratio= net profits before tax / shareholders equity

First year

profit 964182.04

Equity 1456238.375

IRR 66%

Conclusion:

The earning of SEC is 66% on the money the partners have invested in SEC for first year.

3. Times interest earned ratio:

Times interest earned ratio= (earnings before interest and taxes)/ (total interest expense)

Earnings before tax 964182.04

tax paid 125343.6652

Profit tax ratio 13%

Conclusion:

SEC earned 13 times more than its tax expenses.


Page | 28

Net Present value

Year cash outflow cash inflow Net flow NPV

0 763500 0 -763500 -763500

1 21834467.67 22673306.04 838838.3748 75338.3748

2 2032887.855 26641020.5 24608132.65 24683471.02

3 2787406.886 29732834.96 26945428.07 51628899.09

Pay back period Less than 1 year

Conclusion

Hence the payback period of SEC is less than one year i.e 10 months 25 days.


Page | 29

Appendices

Appendix no. 1

Business plan survey

We have done a survey in the locality area of correspondimg management teams of Kathmandu Valley

altogether about 30 houses , each contributing 5 houses by distributing a questionnaire and make them

free to express anything on the topic.

Here is the result and model of questions

QN1. How often load shedding is becoming an obstacles in your routine life?

A. Not so often

b. Is curse

c. Loving it

QN2.What may the best alternatives to solve present load shedding?

a. Inverters

b. Diesel generator

c. Solar plant

d. Anything you suggest

Among the participants two of them suggested that bio fuel can be used to stop load shedding.

QN3. Do you know about green energy?

a. Yes

b. No

QN4. What you use to read during night for study?

a. Solar lamps

b. Emergency lights

c. Candles

d. Don’t read when load shedding

QN5. Do you think solar plant is costly?

a. Yes

b. No

c. Do not know

QN6. What is the main reason behind present energy crisis?

a. Political instability

b. Not enough hydropower plant

c. Leakage and theft of electricity

QN7.What you suggest about to reduce present load shedding and promoting use of solar energy?

Participant expressed their views on the use of solar plants some expressed about high cost of it,

So we need to search other alternatives but many of them wrote that sun is this is nature’s gift for us so

we must make benefits from it by using solar plants and promoting green energy.


Page | 30

Appendix no. 2

Result of survey conducted among 30 persons

S.N. Payment type No. of Persons

1. Full Payment 18

2. Installment Type 12

Appendix no. 3

Glossary

Competitive advantage

The aggregation of factors that sets a small business apart from its competitors and gives it a

unique position in the market.

Equity: In property, the difference between the property’s current market value and the claims

against the property. In a firm the shareholder’s equity is the ownership interest in the firm.

Depreciation

Decrease in the value of equipment from wear and tear and the passage of time.

Partnership

An association of two or more people who co-own a business for the purpose of making a profit.

Guerrilla Marketing Strategy

Unconventional, low cost, creative marketing strategies designed to give small companies an

edge over their large, richer more powerful rivals.

Innovation

The ability to apply creative solutions to problems and opportunities to enhance.

Revenue

The entire amounts of income before any deductions are made.

Assets: Accounting term for everything a company owns and which has a monetary value listed

in the balance sheet.

Budget: A plan of future income and expenses during a specified period, such as one year. In an

operating budget the planned costs and revenues, expenditures and incomes are compared.

Variable Cost

Any costs that change significantly with the level of output.


Page | 31

Fixed Cost

Any cost of production that does not vary significantly with the volume of output.

Inco

me

State

ment

A financial statement that represents a moving picture of a business, comparing its expenses

against its revenue over a period of time to show its net profit.

Balance Sheet

A financial statement, that provides a snapshot of a business’s financial position.

Current Assets

Assets such as cash and other items to be converted into cash within one year.

Fixed Assets

Assets acquired for long-term use in a business.

Liabilities

Creditors’ claims against a company’s assets.

Current Liabilities

Those debts that must be paid within one year.

Cash Inflow

Cash flowing into the business from all sources over a period of time.

Cash Outflow

Cash flowing out of the business from all sources over a period of time.

Expense

Amounts paid for goods and services that may be currently tax deductible.

Return on Investment

The amount of profit (return) based on the amount of resources (funds) used to produce it.

Profit

Profit is the excess of income over expenses.

Differentiation Strategy

A strategy in which a company seeks to build customer loyalty by positioning its goods or

services in a unique or different fashion.

System(Wp) weightage

Costing

price

Marginal

Cost price

Selling

price

Selling

price per

unit


Page | 32

Syst

em

Rati

ng

Inventory Costs

Inventory

System Wp Quantity Cost(Rs) Total Cost(Rs)

20 2 12300 24600

60 3 23600 70800

80 hybrid 4 51100 204400

100 4 62700 250800

200 3 119400 358200

20 0.08 12300 984 20750 1660

60 0.1 23600 2360 37950 3795

80 Hybrid 0.2 51100 10220 71593 14318.6

80 0.07 33300 2331 49685 3477.95

100 0.3 62700 18810 83805.2 25141.56

200 0.25 119400 29850 149962.5 37490.625

Total 1 64555 85883.735


Page | 33

Total 908800

Deducting miscellaneous costs 32900

Total Inventory Cost 875900

Conclusion

The business plan of Solar Energy Company Pvt. Ltd. can be implemented in the Kathmandu valley. We

are very confident that our business will reap lots of benefits economically as well as socially in the

country. The market area of SEC will keep on rising day by day within short period of its establishment.

The company will provide lots of facilities and services regarding solar technology. It will mainly focus

on the customer satisfaction and need. We are sure that it will solve the problems of energy crisis, load

shedding and backup systems in the various sectors like banks, offices, hospitals, houses, etc.

The company will achieve its pay back within a year as we have calculated. The company has its

breakeven units as 15 per months. After this unit the company will be enjoying profits. Similarly it will

enjoy its internal rate of return of 66%. The SWOT analysis and Strength and Weakness analysis of

competitors has been properly done to mitigate the risk.

solar business plan

Documents