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Transcript of Business Plan-global_power _solutions
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GLOBAL POWER
SOLUTIONS
U.VIKHNESH, S.ASWIN
12, PRINCE ROAD
VADAPALANI
CHENNAI
9566144921, 9994785730
G
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BUSINESS PLAN
GLOBAL POWER SOLUTIONS
NAME OF PARTICIPANTS: U.VIKHNESH, S.ASWIN
INSTITUTION NAME: SSN SCHOOL OF MANAGEMENT
AND COMPUTER APPLICATION,
SSNCE
DEGREE / COURSE: MBA 1ST
YEAR
E-MAIL ID: [email protected],
CONTACT NUMBER: 9566144921, 9994785730
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Executive Summaries
Introduction
The “GLOBAL POWER SOLUTIONS” is a Chennai based companydeals with supply of solar photovoltaic (PV) modules in India. These PV modules
are widely used to harness solar energy for electricity generation. The company willinitially import PV modules from china, Germany and Spain and has a plan to set up
the production unit once the initial phase of learning curve is successfully completed.
The reason for the emergence of this company is described as follows.
Clean Energy Sector
India’s GPD grows at 8% and it aspires for double digit growth
rate. In this scenario, energy becomes an important for rapid economic growth. Theelectricity generation in India is almost dirty with approximates 64% comes from
thermal energy. The electricity generation contributes to about 36% of the GHGemissions in the country as per MOEF report 2010.National action plan on climatechange has been launched by the prime minister to combat climate change with the
CO2 emission reduction of 20-25%.Under this plan government has given thrust on
clean energy sector with huge deployment of the clean energy sources across thecountry. Hence it is the wisest choice to make the investment in this sector.
Fig 1: Energy Mix of India
Reason for the use of Solar Energy
Electricity has become one of the compulsory
components in every human life. The major component for power (Electricity)generation is coal. But it is exhaustible. Thus there will be a shortage of powers after
few decades. And in India especially in rural areas there is a maximum power failure, and it may be one of the reasons which affect Agriculture. Past 10 years,
India’s power supply-demand gap has averaged 8-10%. National Electricity Policy
aims at an availability of 1000kWh per-capita, per year, by 2012. This shows thatadditional energy of 450 billion kWh have to be made available in that time. So the
efficient way for power generation is to use the renewable resources. The solar
energy tops as the renewable resources in power generation.
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One hour of sunshine on our planet, if storedadequately, can meet the global needs for an entire year. This isthe potential of solar Energy. Under the national action plan on climate
change, Government of India announced Jawaharlal Nehru National solar Mission
which has the target of 20,000MW by 2022 in India with almost 50% of it being
solar PV. Moreover, India is abundantly blessed with solar radiation of 4-5kWh/sqm
approximately 320 days a year.Photovoltaic (PV) power systems convert sunlight directly into
electricity. A residential PV power system enables a homeowner to generate some or all of their daily electrical energy demand on their own roof, exchanging daytime
excess power for future energy needs (i.e. nighttime usage). The house remains
connected to the electric utility at all times, so any power needed above what thesolar system can produce is simply drawn from the utility. PV systems can also
include battery backup or uninterruptible power supply (UPS) capability to operate
selected circuits in the residence for hours or days during a utility outage. This business plans finds a great demand in marketing, creating jobs and increasing
opportunities for customer savings and their satisfaction. This business is first done
in small scale, later it will be converted into larger scale. The below graph shows theamount of power among various renewable resources and this use of energy has beenforecasted up to 2100.
Fig 2: Exemplary path, global primary energy
Products/Services Offering
• Initially, this company estimates the amount of roof area needed, which also
depends on the PV module’s efficiency in converting sunlight to electricity. Since
the area for PV module is directly proportional to production of watt.
• Then, the company offer’s products such as PV modules, a battery backup or
an UPS and other accessories to the customers along with installation.
• Also, we provide proper services to the customer.
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Target Market
• The company supplies the PV modules for decentralized electrification. So the primary customers to be targeted in this market are Building Contractors, education
institutions, MNC’s which has an rapid increase by numbers, in recent years and also
to the residence (includes apartments) that are existing. The prime customer isBuilding Contractors who can provide sales to us for their future projects. Thus they
can attract the customer by adding this service as one of the features (power saving).
If it is in case of apartments or in cooperate offices or in educational institution or inlarge industries or factories then the cost of product and its maintenance will be
shared by the respective member who is cheaper, that brings more customer
satisfaction.
• In this market we have very less competitor in Chennai; the way to achieve inthis market is easy and simple.
• The next step is to approach the government when there is any tender
noticification related to our business or by approaching them directly and producing
a report with an estimation to supply our products for rural areas and also used ingovernment owned places such as bus stops, street lights and many more.
• The two reasons for which there will be a good opportunity for the steady growth
of our business are
Low Electricity bills, which leads to customer satisfaction
Backups or UPS are used for future power saving
The government policies and regulation on this power
generation
• The application of PV modules and the percentage it is used are
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Source: MNRE Annual report 2007-08
Fig 3: cumulative PV module production in India and application (in MWp)
• In this business. Initially we would take the order and then import the requiredamount of PV modules in bulk and the workers from our organization would install
the setup in the given location.
Mission
To provide better Quality and Price the service so that there is a good profitmargin while remaining competitive, also to make the customer be good.
Vision
To be the global leader in production and supply of PV modules.
Short Term Goals
The short term objective of the company is to attain a goodrelationship with customers including contractors and government officials. The
company should provide good quality of materials, proper installation and services to
customers. The profit is kept low in order to attract the customers from other
competitors.
Long Term Goals
The long term goal of the company is to supply product and
services all over India by starting few production units at respective locations and toexport the products to other countries. Obtain a brand image of the company amongthe customers.
Management Teams
The company is a small scale and thus the management team is
also very small in group. The company’s CEO is Mr.U.VIKHNESH. The
MANAGING DIRECTORS is Mr. VINOD. The Sr. MANAGERS are Mr. RAJESH
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& Mr. GOWTHAM. The Chief Accountant is Mr. GUNA. The Chief marketing and
sales officer is Mr. RAM. The chief customer care and service officer is Mr. RAJU.
Benefits to the Community
Economic Development
The jobs in this market is quiet secured, since it is anrenewable energy industry and the whole global depends on this industry in future,
which increases the demand on this product . It has a high probability of getting
expanded throughout the world. The demand for this market increases and it wouldnot result in resentment to customers. Also it provides high opportunities for the
suppliers and to the dealers, who help in marketing our products. And this is the one
of the industry which provides you the steady growth of profit in present and futureworld. So the suppliers and service providers will get benefited from this industry.
However power generation capacity with estimate in the region of 100MWp withgrid connected solar PV generation at a mere 2.12MWp.
Community Development
Initially there will be a slow progress in the demand, after theawareness about the renewable resources and better economic condition among the
people the demand will increase. Later more than sixty percent of city population
starts using it. In future this may be used as a source as well as power saver packagefor industries, education institution and many more places. This product is an eco-
friendly, which adds a great advantage to the society.
Human Resources Development
In many country like US today directly employs 20,000 people andindirectly supports 100,000 jobs. The figure are expected to rise to150,000 by 2020
equally employment in the US glass industry. Similarly, in India the robust and
expanding industry will create job right across the value chain-from specialized high
paying, high technology sector in R&D, to employment for manufacturing workers,technician and many more. A senior officer in MNRE estimate a 100,000 jobs in PV by
2020.industry sources suggest that if all the job linkages are considered, PV jobs in India
could far exceed their figure.
Company Analysis
Form of Business Ownership
Initially this is a small scale industry, so the company runs in asole proprietorship. But after transformation of company into large scale industry the
partnerships are included. This is carried as an independent business. The license and
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permits obtained are pollution control clearance, land zoning clearance, local permission,
power evacuation facilities, and safety control.
Industry Analysis
This industry operates in the power generation sectors, where there arenegligible competitors in local markets, and very less competitors in national and global
markets. This PV Module manufacturing capacity in India could see dramatic growth.This provides an equal growth and opportunity to the manufacturing industry, which produces charge controllers, inventers and battery system. Initially the company will be
moving with less profit, but once the product in the market finds a way, then there will be
good progress in the profit. At the beginning we are trying to spend more money inmarketing in order to achieve customers through any means especially big and long time
customers. This will be even found as an online business from initial.
Manufacturing and Operations Plan
Location and Space RequirementsThe office is located at Vadapalani, whereas the
godown is located in maduraivayol, this area has been well connected to a bypassroad which make an easy move towards port and also connect to trichy and
Bangalore highway. Thus this will make an efficient cost control management in
logistics. But later when company turns into big scale industry the production unitwill be shifted near thiruvallur such that it is well connected to other major cities
through roadways and railways. And also it is just a couple of hours from port. The
spacing required for the small scale industry is very less (just a closed godown in
five grounds and an empty ground of around 500sq ft on each sides of that godown), but for a manufacturing unit we requires around one fifty hectares of land, which can
be brought by company’s principle amount. Thus we first buy land for that smallscale industry and then when the required amount is obtained then we sell the landand added along with the amount to buy land for large scale industry.
Equipment
The main and important machineries will be purchased only for the large scale
industry, since the small scale industry deals as an purchase of goods, assemble and sales
of goods and also to provide services.
Labor Force
The labors are paid as per the regulation of payment of wages act, 1936 and
bonus and other benefits are provided to the person who puts the company into profit.
There are skilled labor available in Chennai, than searching in other areas, since the
company is new to this market, in order to avoid strikes, layoff and turnovers the contract between bond/contract will be made clear and relevant.
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Inventory Control
There is a separate department for inventory and quality control which
will be directed by CEO of company when it is a small scale industry but when it turnedas a large scale industry these separated departments are maintained by the directors
appointed by the CEO of this company. During small scale industry, the inventories are
purchased more than the customer’s orders. This helps in replacement of goods, if any of it found faulty. Thus we maintain the proper time management in supplying products to
costumers. But during large scale industry we have quality control department, which
will meet the required standard of the product to the customer.
Labor Force
Labor Requirements
The labors are required less in the small scale industry from which
few skilled men are required in particular department and the qualification we are
recruiting the labors who are skilled posses a bachelor degree in their respective field
whereas in case of large scale industry we are looking for huge number of skilled persons. The job description are been provided by in written format at the time of
recruitment.
The wages will be quiet less compared to other industry at the initial stage. But that willraise up after making profit maximization and also obtaining the brand image of the
company. Thus the company mainly depends on the efficient labor force and the
marketing technique.
Selection, Orientation, and Training
At initial stage, that is at small scale industry the
company will recruit the person by the experts working within the company and when it
is transformed into the large scale industry the company will hand over the recruitment process to the consultancy where they will recruit and train the people for which the
payment for them will be received from the company. And the company will put a
contract those who have been selected to work in this company for 2-3years. If they break
the bond, then they will have to pay an amount of Rs 100000/- to the company.
Evaluation, Policies, and Rules
At initial level the evaluation is coordinated by the senior
HR staff. But at the time when the company transformed into large scale industry, theemployee will be evaluated by their superior officer and this evaluation is verified by thesenior staffs in HR dept regularly. All the authority in the company will provide good
delegation to the entire worker at any time. The company follows basic disciplines which
other company does so, but here the discipline is maintained in friendly manner rather than in a rude way. When the employee’s contract gets over or if he breaks the bonds, at
that time the HR department will look after the process to avoid the break in work. It is
done so by taking regular updates of the availability of employee’s in the job portals and
tackling the situation with the other employee’s by doing overtime such that this process
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will be of shorter period and these rules will be mention to the employee’s in their
contract.
Marketing Plan
Fig 4: Global PV market, modules
Fig 5: The installation of PV module during 2003 among various countries is shown
below
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Target Market(s)
The first way to market the product at the initial position is to go withadvertisements. In parallel, the person from this company will approach to every
customers (builders, educational institutions, cooperate companies). This marketing
strategy will be initiated in Chennai. And if it finds an improvement, then this techniqueis used to supply to the customer of other cities, or else we find another solution. Oncethe customers are focused, we have to attract them by using proper marketing techniques
which includes advertisement, door to door sales etc and then we have to retain them.
Once customer retention are made, then there will bean slight improvement in marketingthe product, and this customer retention will even make popularize our product and its
brand image. As mentioned we are trying to expand in marketing this product in rural
areas mainly for agriculture and respective people with the help of government. There isa slight drop in marketing the product at its initial stage and this may be one of the
drawbacks in this business.
Environment In India, the economy is quiet good and there is a steady growth in recent
years. Thus it has improved the standard of living which in turns results in turning
luxurious needs into basic needs. In this business the government has provided variousassistance and allocated funds to use of efficient use of renewable resources. In today’s
world the technology goes wider along with innovation and this also have an influence in
this business in future.
Marketing Objectives
As said earlier the company will market with the help of advertisements, and also with CRM. The company may even move with the help of share
markets. The share value and its moment are monitored by the CFO of this company. But
this share market are used for the expansion and development of the business, incase theshare holders overall applied to get their share amount then the company may get back
into its initial position or may even wind up certain branches which produces small profit
and growth. This company will not wind up under any circumstances. After few years,the company may get wider its branches throughout India. Every couple of months before
the financial year ends a market report has to be submitted by the marketing dept to all
other senior persons of management in that company such that it will help us to make an
increase in profit.
Financial Plan
To initiate the company we have to invest huge amount into this business. This may involves around 50-60 lakhs in terms of other expenses which
includes assets. The balance sheet is provided below. This calculation is based on
assumption but the range may differ in little percentage only. The minimum average
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estimated profit made is about five to six lakhs per annum. The estimated payback period
is about six to seven years. The return on assert is about 12 percent
PAYBACK PERIOD:
OTHER COST
PAYBACK PERIOD CALCULATION:
INCOME 4,00,000
CONSUMABLE COSTS 20,000
OTHER COSTS
(13,000X12)
1,56,000
Profit
subsidy (10%)
2,24,000
22,400
PROFIT AFTER SUBSIDY
Add DEPRECIATION(assumed as 1.5% on fixed assets)
2,46,400
64,500
Cash flow 3,10,900
Initial investment including
Working capital
20,00,000
PAY BACK PERIOD 20,00,000/3,10,900
= 6.43 YEARS
Man power 2200
Maintenance 1200
Telephone 600
Admin 1000
Marketing 2500
Travel 2500
Miscellaneous 3000
Total 13000
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BALANCE SHEET OF GLOBAL POWER SOLUTIONS
ASSETS
Current Assets: Cash-in-hand 2,06,000Cash at bank 1,19,000Debtors (Accounts receivable) -Bills receivable (Notes receivable) - Stock in trade (Inventory) 3,00,000
Total Current Assets 6,25,000
Fixed Assets:
Furniture and fittings 4,00,000 Buildings 13,00,000 Plant and machinery 7,00,000 Land 19,00,000
Total Fixed Assets 43,00,000 Total Assets 49,25,000
Liabilities:
Current Liabilities: Creditors (Accounts payable) 20,00,000 Bills payable (Notes payable) - Bank overdraft -
Total Current Liabilities 20,00,000
Fixed Liabilities:
Long terms loans 9,25,000 Owner's capital 20,00,000 Add net income for the year ---------
29,25,000
Total Liabilities and Capital 49,25,000
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Trading and Profit and Loss Account/Income Statement
Income From Sales: Sales 7,00,000
Less: Sales returns -
Sales discount -
Net Sales 7,00,000
Cost of Goods Sold:
Purchases 3,00,000
Less: Purchases returns -
Net purchases 3,00,000
GROSS PROFIT 4,00,000
Operating Expenses:
Selling Expenses:
Sales salaries 20,000
Advertising expenses 12,000
Insurance expense – selling 10,000
Store supplies expenses 13,000
Sundry selling expenses 5,000
Total selling expenses 60,000
General Expenses:
Office salaries 23,000
Taxes -Insurance expenses general 10,000
Office supplies expenses 15,000Sundry general expenses -
Total general expenses 58,000
Total operating expenses 1,18,000
Net profit from operations ------
Other Income:Rent income
Other Expenses:Interest expenses
------
NET PROFIT 2,82,000
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Exit Strategy
As an entrepreneur, we would like to move with the business and not to wind up. Incase
if that situation occur. we would go with the merger and acquisition of my company,which has good brand image, so that the shareholders will have a drop in share value and
may get increase in that value after period of time. But it won’t make them loose their
overall money. Incase the company gets windup then as per the rule the shareholder getsthe money by selling the asset of the company.
Critical Risks and Assumptions
If the market develops slowly, we have to identify in customer point of view as what
factor influences the slow growth and similarly we have to be in good relationship with
suppliers such that we can market under the time of demand. If there is competitor in
business, it will get our product more quality and better. And also adds support andmakes important about the product in general to public. Thus we have to be keen on the
competitor such that if they introduce any concept then we have to benchmark it andreproduce those ideas in better way. If the company found that it cannot turn into largescale industry, then we have to start similar small scale industry in major regions of India,
and thus this may help in constituting a big scale industry.