The pioneering ideology of neo liberalism; individual self-interest dominated much of the manager... more The pioneering ideology of neo liberalism; individual self-interest dominated much of the managerial discourse and practices. The consequences are dysfunctional to social, environmental and organizations' internal front. The root cause is narrow focus of organization and its management control system on profitability and short-term pursuits. Business competitiveness and sustainability is thus maltreated. It is argued that inculcating spirituality perspectives leads broader and long-term focus and fosters business competitiveness and sustainability. One approach to implementing spirituality is Practical Compassion, an approach drawn from seer, sages and ancient wisdom. The paper discusses the approach to implement spirituality with application of the popular performance measurement frameworks and models. The motivation is to conceptualize, develop and foster the use of spirituality scorecard, as a tool to implement spirituality. Practices of leading corporate of the world are painted to exemplify and demonstrate use of spirituality scorecard.
Afro-Asian journal of finance and accounting, 2015
The weekly and monthly returns of stock indices and portfolios of stock indices were analysed to ... more The weekly and monthly returns of stock indices and portfolios of stock indices were analysed to investigate the weak form of market efficiency in developed and emerging capital markets using standard tests of market efficiency. Our results, based on an analysis of 13 years of data, show mixed results for different indices. However, portfolio returns of developed and emerging markets indicate the absence of market efficiency. Developed markets show inefficiency for monthly returns that is contrary to the conventional perception that developed markets are efficient in comparison to emerging markets owing to their long existence, better maturity, depth and technological development.
Subject area Management control system, corporate performance management, budgeting, planning, mu... more Subject area Management control system, corporate performance management, budgeting, planning, multinational organization. Study level/applicability Graduate and executive education level management programs. Case overview General Motors India (GMI) operations established in 1994 and grew steadily, unlike her startling global performance. In 2007, GMI unveiled its new vision and mission for aggressive growth, expansion and establishing presence across all segments. With increased globalization of General Motors Corporation (GMC), the strategic importance of GMI for sourcing was envisaged. The case describes the organization structure and management control systems at GMI and the changes onto new strategy and vision. The case narrates the unique futures of its control systems such as dual reporting and matrix organization, business plan deployment (BPD), budgeting, performance measurement and compensation system. Expected learning outcomes The financial planning and control system in a large decentralized multinational subsidiary. Typical organizational responsibility structure and administrative and functional, dual-control mechanism. Appreciate strategic planning and budgeting process and how the strategy is cascaded through multiple key result areas and the BPD board. The business environment and strategy dynamics and its relationship with the prevalent control system. Opportunity for students to speculate the changes in control system in wake of radical changes in the business and company environment. Opportunity to introduce Simmons (1995) levers of controls and management control system package. Supplementary materials Teaching notes.
Efficient Market Theory, pioneered by Eugene Fama, attracted researchers for analysis of market e... more Efficient Market Theory, pioneered by Eugene Fama, attracted researchers for analysis of market efficiency in developing market of India. Mishra (2005) considered the bonus issue announcement as the information which can affect the efficiency of the market and challenge the Efficient Market Theory. The effect of the information of bonus issue announcement is found to be positive on the market. The reason why it is so has been explained by many different hypotheses like signalling hypothesis (Foster and Vickrey 1978), cash distribution hypothesis (Ghosh and Woolridge 1988), liquidity hypothesis (Lakonishok and Lev 1987), and attention-getting hypothesis (Doran and Nachtmann 1988). This paper examines the effect of bonus announcements and the record date of bonus issue on the efficiency of the Indian stock market. Hypothesis test for the difference between the means of two samples method is used. Findings support the semi-strong form of market efficiency in case of most of the stocks. However, evidence of insider trading was observed in the sample companies that do not show efficiency. In case of record date the market is found to be efficient. A further analysis of bonus announcement effect on liquidity and effect of announcement with future record date uncovers evidences of inefficacy. In case-to-case company-specific market data analysis insider trading is evident.
Indian banking sector is characterized with intense competition, amongst the best regulated in th... more Indian banking sector is characterized with intense competition, amongst the best regulated in the world and rapid growth. Indian banking sector have undergone rapid reforms and liberalization in last two decades, which resulted into advent of new and strong private sector banks, increased technology adoptions, rapid branch expansion, prudential regulations, focus on financial inclusion, market discipline of public sector banks and demanding customers. With Indian Banking system poised to become the world's 3 rd largest by 2025 and owing to the dynamism in banking sector the paper examines the bank efficiency. Most past studies focused on the impact of some or other regulatory phase, some segments of banking and under constant return scale assumption. Our study is distinct to the extent that we examine the bank efficiency after the Phase III and IV reforms and subprime crisis, across all ownership segments of Scheduled Commercial Banks and under plausible assumption of variable returns of scale given the dynamic banking environment. We employ non-parametric Data Envelopment Analysis using intermediation approach under of variable return of scale. Our study period consist of 2008-2012 post reform and subprime crisis period and covers 26 public, 19 private and 21 foreign banks operating in India. We further examine the variation in efficiency across different ownership groups and small and large bank sizes over the period. Our findings indicate that Public sector banks' average efficiency scores were better than that of private sector while foreign banks had the lowest efficiency score. Private sector banks had lower heterogeneity in efficiency compared to public sector banks. The smaller banks showed better efficiency compared to larger banks across the ownership groups. We find that the banking reforms have seen improvement in efficiency of public sector banks as compared to private and foreign banks. Thus our findings differ from studies on other emerging markets indicating efficiency improvement of foreign banks as compared to pubic banks. While banks have shown overall efficiency the lower technical efficiency indicate inefficiency in large banks probably due to sub optimal scale and scope efficiency. Our study point outs management of assets, branch rationalization and use of technology to improve the bank efficiency. The study suggests policy focus on reduction of non-performing assets and rationalization of staff and branches to obtain efficiency gain. Regulatory reforms in Indian Banking sector saw improvement in efficiency of public and private banks and efficiency scores differed across various ownership and large and small bank groups.
The study applies two-stage data envelopment analysis (DEA) and bootstrap to estimate the Profit ... more The study applies two-stage data envelopment analysis (DEA) and bootstrap to estimate the Profit Efficiency (PE) and its factors for Indian bank groups. Recognizing the heterogeneity in the bank sizes, we perform DEA to estimate PE for small, medium, and large banks across different ownership. The results show that large public, private, and foreign sector banks are more profit efficient than small and medium banks. Over the period, private banks showed the highest improvement in efficiency, followed by foreign banks while the efficiency of Public sector banks was highest in 2008 showed imporvement for next few years and declined moderately in 2012. In the second stage, we use both normal Tobit and methodogically superior truncated bootstrap regression to capture the exogenous factors affecting the PE. We find GDP growth rate and capital adequacy ratio were not significant, while return on assets, equity-to-asset ratio, size of the operation, number of branches, Herfindahl-Hirschman Index(HHI), and ownership structure are significant determinants of bank efficiency. The study contributes to the literature ABOUT THE AUTHORS
The city of Indore, a commercial hub of Madhya Pradesh province of India through a SPV, Atal Indo... more The city of Indore, a commercial hub of Madhya Pradesh province of India through a SPV, Atal Indore City Transport Service Ltd. (AICTSL), initiated the development of BRTS on a PPP (public-private partnership) model in 2007. It invited partnerships with private parties for bus operators, construction and other services to induct iBus (BRT buses) on specific routes. Prior to 2007, the city was reeling under poor traffic conditions with a modest road infrastructure, erratic traffic and pitiful public transportation. BRTS was launched to enhance city roads, improve traffic conditions and encourage the public to use public transportation and reduce reliance on private vehicles. However, the corridor infrastructure work was delayed and even after the launch of BRT buses in 2013, controversies further played spoil sport. Congestion increased at crossovers and common lanes and numerous road fatalities steered public interest litigations that questioned the very design and purpose of the BRTS. A court verdict allowing four wheelers to use the lane that was envisioned exclusively for BRTS and a review the traffic conditions and corridor configurations was a major obstacle for bringing a world class sustainable public transportation system to Indore. This case provides an interesting setting to study various aspects of development, structuring, financing, feasibility and viability of the BRTS. The case highlights various issues faced by managers and regulators handling city transportation projects. This case would be suitable for courses on project financing, public-private partnerships, infrastructure financing for modules related to transportation and infrastructure financing or structuring PPP for graduates and executive program levels.
This paper investigates the predictability of asset prices among developed and emerging markets. ... more This paper investigates the predictability of asset prices among developed and emerging markets. Weekly and monthly stock market indices from developed and emerging market economies are analysed to check the validity of weak-form of Efficient Market Hypothesis (EMH) using various empirical methods described in literature. Results demonstrate the possibility of predicting monthly returns in developed markets. Effective international diversification is possible as long-term co-movements among markets are not observed. However, co-movements are observed in monthly returns of U.S.A, Japan and U.K. thus, enabling an investor to predict monthly returns in these markets. Overall results show that prediction of asset returns in emerging markets is intricate in comparison to developed markets.
In the present study, Data Envelopment Analysis (DEA) was used to estimate scale efficiency of In... more In the present study, Data Envelopment Analysis (DEA) was used to estimate scale efficiency of Indian banks during 2008-2012. The given period was characterized by global financial crisis, rapid regulatory reforms and intense competition among Indian banking sector. The results showed considerable variation in average levels of scale efficiency across various ownership groups of Indian banking system. In general, public and private banks are found to be more scale efficient than foreign banks. There was higher scale efficiency of smaller public, private and foreign banks than larger counterparts in respective groups to believe that small banks had better prospect in the area of scale of operations. The trend of scale efficiency during 2008-2012 across the public, private and foreign banks of India was also examined and the results showed low heterogeneity in scale efficiency of public and private banks after 2008, whereas higher heterogeneity in foreign banks across the study period 2008-2012. The ownership possibly explained the difference across the scale efficiency of banks in India.
Sasan Power project was part of Governments bold new program of adding 50000 MwH generation capac... more Sasan Power project was part of Governments bold new program of adding 50000 MwH generation capacity by means of setting up 12 new Ultra Mega Power Plants to meet the increasing energy demands of the economy. Initially Sasan Power Ltd was incorporated as a Special Purpose Company (SPC), wholly owned by the Power Finance Corporation (PFC). The SPL was responsible for activities like site selection, obtaining coalmines wherever applicable, acquiring land, obtaining various clearances & approvals to expedite the developments. Located at Pithead, the coal-fired plant would have capacity of 4000 MwH using super critical technology. The PFC carried out an International Competitive Bidding process and awarded SPL to the Reliance Power who quoted the lowest levelised tariff of Rs. 1.19 per unit. Subsequently Reliance Power had built and commissioned Sasan Power Plant and would supply electricity as per the long term Power Purchase Agreement with 14 procurers. In UMPP program, the Ministry of Power recognized the need to "move away from cost plus approach for tariff determination to further encourage private sector investment." The program had many distinctive advantages as compared to traditional Independent Power Plants using subcritical technology in terms the scale, efficiency, consultative process used for development of the plants. However the UMPP dream have soured in more then one-way ranging with the tariff determination, rising fuel cost, delays, cost escalations, environmental clearances for mining, fuel procurement and so on. The case provides opportunities for understanding the development in power sector and the issues the Sponsors and the regulators faced in implementing the ambitious Sasan Ultra Mega Power plant. The case illustrates the unique opportunities created in the Indian power industry by changes in regulations; technology and structure of power plants. The formations of shell companies that would transferred to private parties to built own and operate ultra mega power plants strategically located at ports or pithead. Long term Power Purchase Agreements with multiple utilities would be signed. The program marked a new era of use of super critical technology, ultra mega scale to significantly lower the cost of energy resulting in to very competitive fixed levelised tariffs as against the cost plus tariff used traditionally. The issue is to estimate the value – attractiveness of the investment and associated opportunities and why did the program fail?
Shakti Pumps (India) Ltd is a Rs. 300 crores, company, known for manufacturing and exporting worl... more Shakti Pumps (India) Ltd is a Rs. 300 crores, company, known for manufacturing and exporting world-class energy efficient stainless steel pumps, motors and flow boosters. While pumps were often used in rural areas for irrigation the scarcity or unavailability of electricity posed obvious hindrance in installation and utilization of AC pumps in India. The super star export house decided to launch the solar panel fitted pumps in 2014. The additional cost of solar penal came at about 1.25 lacs per kWh. While the solar pumps saved the fuel cost and had potential to improve crop yield, it required high upfront investment and effective sunlight. With an average energy consumption of pumps at 6-7 kWh in rural areas for irrigation the capital cost of solar penal remained a major hurdle in penetration of such pumps. The cost of electrifying the rural areas- extending grid connection to farmer was high, but with benefits of savings of coal in generation of electricity the management wondered if they could convince government about the larger benefits and seek some support and subsidy. With intense competition in potentially lucrative market Shakti need to articulate an effective strategy to make the product successful. The case discusses various issues and concerns management faced with launch of the solar pumps.
The pioneering ideology of neo liberalism; individual self-interest dominated much of the manager... more The pioneering ideology of neo liberalism; individual self-interest dominated much of the managerial discourse and practices. The consequences are dysfunctional to social, environmental and organizations' internal front. The root cause is narrow focus of organization and its management control system on profitability and short-term pursuits. Business competitiveness and sustainability is thus maltreated. It is argued that inculcating spirituality perspectives leads broader and long-term focus and fosters business competitiveness and sustainability. One approach to implementing spirituality is Practical Compassion, an approach drawn from seer, sages and ancient wisdom. The paper discusses the approach to implement spirituality with application of the popular performance measurement frameworks and models. The motivation is to conceptualize, develop and foster the use of spirituality scorecard, as a tool to implement spirituality. Practices of leading corporate of the world are painted to exemplify and demonstrate use of spirituality scorecard.
Afro-Asian journal of finance and accounting, 2015
The weekly and monthly returns of stock indices and portfolios of stock indices were analysed to ... more The weekly and monthly returns of stock indices and portfolios of stock indices were analysed to investigate the weak form of market efficiency in developed and emerging capital markets using standard tests of market efficiency. Our results, based on an analysis of 13 years of data, show mixed results for different indices. However, portfolio returns of developed and emerging markets indicate the absence of market efficiency. Developed markets show inefficiency for monthly returns that is contrary to the conventional perception that developed markets are efficient in comparison to emerging markets owing to their long existence, better maturity, depth and technological development.
Subject area Management control system, corporate performance management, budgeting, planning, mu... more Subject area Management control system, corporate performance management, budgeting, planning, multinational organization. Study level/applicability Graduate and executive education level management programs. Case overview General Motors India (GMI) operations established in 1994 and grew steadily, unlike her startling global performance. In 2007, GMI unveiled its new vision and mission for aggressive growth, expansion and establishing presence across all segments. With increased globalization of General Motors Corporation (GMC), the strategic importance of GMI for sourcing was envisaged. The case describes the organization structure and management control systems at GMI and the changes onto new strategy and vision. The case narrates the unique futures of its control systems such as dual reporting and matrix organization, business plan deployment (BPD), budgeting, performance measurement and compensation system. Expected learning outcomes The financial planning and control system in a large decentralized multinational subsidiary. Typical organizational responsibility structure and administrative and functional, dual-control mechanism. Appreciate strategic planning and budgeting process and how the strategy is cascaded through multiple key result areas and the BPD board. The business environment and strategy dynamics and its relationship with the prevalent control system. Opportunity for students to speculate the changes in control system in wake of radical changes in the business and company environment. Opportunity to introduce Simmons (1995) levers of controls and management control system package. Supplementary materials Teaching notes.
Efficient Market Theory, pioneered by Eugene Fama, attracted researchers for analysis of market e... more Efficient Market Theory, pioneered by Eugene Fama, attracted researchers for analysis of market efficiency in developing market of India. Mishra (2005) considered the bonus issue announcement as the information which can affect the efficiency of the market and challenge the Efficient Market Theory. The effect of the information of bonus issue announcement is found to be positive on the market. The reason why it is so has been explained by many different hypotheses like signalling hypothesis (Foster and Vickrey 1978), cash distribution hypothesis (Ghosh and Woolridge 1988), liquidity hypothesis (Lakonishok and Lev 1987), and attention-getting hypothesis (Doran and Nachtmann 1988). This paper examines the effect of bonus announcements and the record date of bonus issue on the efficiency of the Indian stock market. Hypothesis test for the difference between the means of two samples method is used. Findings support the semi-strong form of market efficiency in case of most of the stocks. However, evidence of insider trading was observed in the sample companies that do not show efficiency. In case of record date the market is found to be efficient. A further analysis of bonus announcement effect on liquidity and effect of announcement with future record date uncovers evidences of inefficacy. In case-to-case company-specific market data analysis insider trading is evident.
Indian banking sector is characterized with intense competition, amongst the best regulated in th... more Indian banking sector is characterized with intense competition, amongst the best regulated in the world and rapid growth. Indian banking sector have undergone rapid reforms and liberalization in last two decades, which resulted into advent of new and strong private sector banks, increased technology adoptions, rapid branch expansion, prudential regulations, focus on financial inclusion, market discipline of public sector banks and demanding customers. With Indian Banking system poised to become the world's 3 rd largest by 2025 and owing to the dynamism in banking sector the paper examines the bank efficiency. Most past studies focused on the impact of some or other regulatory phase, some segments of banking and under constant return scale assumption. Our study is distinct to the extent that we examine the bank efficiency after the Phase III and IV reforms and subprime crisis, across all ownership segments of Scheduled Commercial Banks and under plausible assumption of variable returns of scale given the dynamic banking environment. We employ non-parametric Data Envelopment Analysis using intermediation approach under of variable return of scale. Our study period consist of 2008-2012 post reform and subprime crisis period and covers 26 public, 19 private and 21 foreign banks operating in India. We further examine the variation in efficiency across different ownership groups and small and large bank sizes over the period. Our findings indicate that Public sector banks' average efficiency scores were better than that of private sector while foreign banks had the lowest efficiency score. Private sector banks had lower heterogeneity in efficiency compared to public sector banks. The smaller banks showed better efficiency compared to larger banks across the ownership groups. We find that the banking reforms have seen improvement in efficiency of public sector banks as compared to private and foreign banks. Thus our findings differ from studies on other emerging markets indicating efficiency improvement of foreign banks as compared to pubic banks. While banks have shown overall efficiency the lower technical efficiency indicate inefficiency in large banks probably due to sub optimal scale and scope efficiency. Our study point outs management of assets, branch rationalization and use of technology to improve the bank efficiency. The study suggests policy focus on reduction of non-performing assets and rationalization of staff and branches to obtain efficiency gain. Regulatory reforms in Indian Banking sector saw improvement in efficiency of public and private banks and efficiency scores differed across various ownership and large and small bank groups.
The study applies two-stage data envelopment analysis (DEA) and bootstrap to estimate the Profit ... more The study applies two-stage data envelopment analysis (DEA) and bootstrap to estimate the Profit Efficiency (PE) and its factors for Indian bank groups. Recognizing the heterogeneity in the bank sizes, we perform DEA to estimate PE for small, medium, and large banks across different ownership. The results show that large public, private, and foreign sector banks are more profit efficient than small and medium banks. Over the period, private banks showed the highest improvement in efficiency, followed by foreign banks while the efficiency of Public sector banks was highest in 2008 showed imporvement for next few years and declined moderately in 2012. In the second stage, we use both normal Tobit and methodogically superior truncated bootstrap regression to capture the exogenous factors affecting the PE. We find GDP growth rate and capital adequacy ratio were not significant, while return on assets, equity-to-asset ratio, size of the operation, number of branches, Herfindahl-Hirschman Index(HHI), and ownership structure are significant determinants of bank efficiency. The study contributes to the literature ABOUT THE AUTHORS
The city of Indore, a commercial hub of Madhya Pradesh province of India through a SPV, Atal Indo... more The city of Indore, a commercial hub of Madhya Pradesh province of India through a SPV, Atal Indore City Transport Service Ltd. (AICTSL), initiated the development of BRTS on a PPP (public-private partnership) model in 2007. It invited partnerships with private parties for bus operators, construction and other services to induct iBus (BRT buses) on specific routes. Prior to 2007, the city was reeling under poor traffic conditions with a modest road infrastructure, erratic traffic and pitiful public transportation. BRTS was launched to enhance city roads, improve traffic conditions and encourage the public to use public transportation and reduce reliance on private vehicles. However, the corridor infrastructure work was delayed and even after the launch of BRT buses in 2013, controversies further played spoil sport. Congestion increased at crossovers and common lanes and numerous road fatalities steered public interest litigations that questioned the very design and purpose of the BRTS. A court verdict allowing four wheelers to use the lane that was envisioned exclusively for BRTS and a review the traffic conditions and corridor configurations was a major obstacle for bringing a world class sustainable public transportation system to Indore. This case provides an interesting setting to study various aspects of development, structuring, financing, feasibility and viability of the BRTS. The case highlights various issues faced by managers and regulators handling city transportation projects. This case would be suitable for courses on project financing, public-private partnerships, infrastructure financing for modules related to transportation and infrastructure financing or structuring PPP for graduates and executive program levels.
This paper investigates the predictability of asset prices among developed and emerging markets. ... more This paper investigates the predictability of asset prices among developed and emerging markets. Weekly and monthly stock market indices from developed and emerging market economies are analysed to check the validity of weak-form of Efficient Market Hypothesis (EMH) using various empirical methods described in literature. Results demonstrate the possibility of predicting monthly returns in developed markets. Effective international diversification is possible as long-term co-movements among markets are not observed. However, co-movements are observed in monthly returns of U.S.A, Japan and U.K. thus, enabling an investor to predict monthly returns in these markets. Overall results show that prediction of asset returns in emerging markets is intricate in comparison to developed markets.
In the present study, Data Envelopment Analysis (DEA) was used to estimate scale efficiency of In... more In the present study, Data Envelopment Analysis (DEA) was used to estimate scale efficiency of Indian banks during 2008-2012. The given period was characterized by global financial crisis, rapid regulatory reforms and intense competition among Indian banking sector. The results showed considerable variation in average levels of scale efficiency across various ownership groups of Indian banking system. In general, public and private banks are found to be more scale efficient than foreign banks. There was higher scale efficiency of smaller public, private and foreign banks than larger counterparts in respective groups to believe that small banks had better prospect in the area of scale of operations. The trend of scale efficiency during 2008-2012 across the public, private and foreign banks of India was also examined and the results showed low heterogeneity in scale efficiency of public and private banks after 2008, whereas higher heterogeneity in foreign banks across the study period 2008-2012. The ownership possibly explained the difference across the scale efficiency of banks in India.
Sasan Power project was part of Governments bold new program of adding 50000 MwH generation capac... more Sasan Power project was part of Governments bold new program of adding 50000 MwH generation capacity by means of setting up 12 new Ultra Mega Power Plants to meet the increasing energy demands of the economy. Initially Sasan Power Ltd was incorporated as a Special Purpose Company (SPC), wholly owned by the Power Finance Corporation (PFC). The SPL was responsible for activities like site selection, obtaining coalmines wherever applicable, acquiring land, obtaining various clearances & approvals to expedite the developments. Located at Pithead, the coal-fired plant would have capacity of 4000 MwH using super critical technology. The PFC carried out an International Competitive Bidding process and awarded SPL to the Reliance Power who quoted the lowest levelised tariff of Rs. 1.19 per unit. Subsequently Reliance Power had built and commissioned Sasan Power Plant and would supply electricity as per the long term Power Purchase Agreement with 14 procurers. In UMPP program, the Ministry of Power recognized the need to "move away from cost plus approach for tariff determination to further encourage private sector investment." The program had many distinctive advantages as compared to traditional Independent Power Plants using subcritical technology in terms the scale, efficiency, consultative process used for development of the plants. However the UMPP dream have soured in more then one-way ranging with the tariff determination, rising fuel cost, delays, cost escalations, environmental clearances for mining, fuel procurement and so on. The case provides opportunities for understanding the development in power sector and the issues the Sponsors and the regulators faced in implementing the ambitious Sasan Ultra Mega Power plant. The case illustrates the unique opportunities created in the Indian power industry by changes in regulations; technology and structure of power plants. The formations of shell companies that would transferred to private parties to built own and operate ultra mega power plants strategically located at ports or pithead. Long term Power Purchase Agreements with multiple utilities would be signed. The program marked a new era of use of super critical technology, ultra mega scale to significantly lower the cost of energy resulting in to very competitive fixed levelised tariffs as against the cost plus tariff used traditionally. The issue is to estimate the value – attractiveness of the investment and associated opportunities and why did the program fail?
Shakti Pumps (India) Ltd is a Rs. 300 crores, company, known for manufacturing and exporting worl... more Shakti Pumps (India) Ltd is a Rs. 300 crores, company, known for manufacturing and exporting world-class energy efficient stainless steel pumps, motors and flow boosters. While pumps were often used in rural areas for irrigation the scarcity or unavailability of electricity posed obvious hindrance in installation and utilization of AC pumps in India. The super star export house decided to launch the solar panel fitted pumps in 2014. The additional cost of solar penal came at about 1.25 lacs per kWh. While the solar pumps saved the fuel cost and had potential to improve crop yield, it required high upfront investment and effective sunlight. With an average energy consumption of pumps at 6-7 kWh in rural areas for irrigation the capital cost of solar penal remained a major hurdle in penetration of such pumps. The cost of electrifying the rural areas- extending grid connection to farmer was high, but with benefits of savings of coal in generation of electricity the management wondered if they could convince government about the larger benefits and seek some support and subsidy. With intense competition in potentially lucrative market Shakti need to articulate an effective strategy to make the product successful. The case discusses various issues and concerns management faced with launch of the solar pumps.
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