INTRODUCTION

Dr. Harish Hande started SELCO (Solar electric light company) in 1995. The company’s focus was on
providing power supply through solar energy to people with low income in rural areas as there are
many parts in the country where there is no electrification. So, their primary customer base is poor
people, street vendors, farmers. They have already provided their services to more than 200,000
households and 4,000 Institutions. They had Energy Service Centre (ESC), which works in marketing,
selling, installing, and maintenance services. Their central advertising channel is engagement with
the customers directly.

 Strength  Weakness
 Ambitious leadership.  High cost of PV systems components.

 Doorstep service and installation  There is no standardized product, so they

of the systems. have to create every product according to

 Support of different NGOs and their needs.

financial organizations as it was

 Opportunities  Threats
 They can expand their service in  Entry of new competitors with the cheaper
either market expansion, product product is possible.
 Opportunity for product expansion.  Increasing electrification might take away
As they already have the their customer base.
supporting operational chain in
place.

SWAT Analysis of SELCO.

1). Problem - Scaling up the business

Since SELCO settled its business in Karnataka, and parts of Maharashtra and Gujrat, they have
partnered with SEWA in Gujrat, which helped them in financing the customers and getting them the
ground network, but this wasn't available in other parts of the country because of which they will need
to develop. Their franchise model also didn't work as they tried in Karnataka, so they needed to find a
better model for the expansion.

Recommendations:

 SELCO will require personal engagement with low-income people and considerable
investments to enter a new state. So, to increase their profits, SELCO can also extend their
customer base by providing solar energy solutions to corporate clients that might not have to
be a high volume customer base. Still, they might get more profit from a single project. And
firms can integrate PV systems and conventional electricity, in the daytime, they can use
electricity from the traditional way, but in nighttime or alternate day they can use power
generated from the PV systems to run and will save the cost. As many companies are also
looking for sustainable ways to complete their energy requirements, they will be willing to
partner with SELCO to fulfill these sustainable energy requirements.
 Using this profit to increase their marketing channels and their ground presence by recruiting
more local salespeople and training them to align with the company's customer-based value.
And then use the ESC channels to supply the products required according to customers need.
This will give company presence like what SEWA provided in other states in terms of
marketing and installment. And to provide financing services to customers they can tie up with
regional banks which can provide their customers with EMI ‘s according to their income. They
don’t need to expand rapidly they can start by targeting a few villages and towns.
 They can talk to different state governments to check if there is any government willing to
support this social change or is any government scheme available for backing green energy
initiatives, whether in the form of subsidy or tax relaxation. And after selecting these states
they can look for states where rural electrification is low (Bihar, Assam, etc.) so they might get
better demand there. In this way they might bring down cost or if there is any need arises, they
can bring down the prices.

2). Problem – Not having a stable supply of PV components at reasonable price .

As SELCO depends on suppliers for the PV components but as can be seen that in 2005 when there
was an international shortage in supply of solar cells, their price rose, which then increased the cost
of the PV systems. Which in turn created a problem for them that can occur again if there is a
shortage of any other component of the PV system, which will cut down their profits because their
main customer segment is the Base of the pyramid people so they cannot increase the prices as
freely.

Recommendations:

 SELCO can try to make contact with local suppliers and try to procure the components from
different suppliers, so they also don't have too much dependency on one supplier only. This
way if they come in contract with a supplier at a fixed price and for a fixed period, this can help
them to balance out any sudden change in price or international demand-supply.
 They can create an inventory of components of PV systems, if there is any shortage, price
increment or any supply crunches, this can smoothen out the supply of the PV components
wherever there is demand without incurring any extra cost because of price change.
 This inventory can be calculated by estimating the average demand of PV systems monthly
with also considering the increase in it. And having 3 months of advance inventory in place.
 Creating inventory might need some extra fund requirement but company can resist any
uncertainties regarding supply in future.

3). Problem – Reducing customer base as electrification is increasing in rural areas.

Analysis: As electrification is increasing day by day in rural areas because of government policies,
so this can reduce SELCO's primary customer base as poor household will be able to get power
access directly from the electric grid then they might not buy PV systems as they won't be willing to
buy something by incurring extra cost. As government will be building the infrastructure, poor people
will need to pay small amount according to their usage so they will not be willing to invest in PV
system. Also when any household need for power will increase that might not be fulfilled by PV
systems so they will need to again invest to increase it’s capacity this problem will not be if the
customer is using electricity from grid so customer might be reluctant to buy.

Recommendations:

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 SELCO SOLAR LIGHT PRIVATE LIMITED

 As they already have their ecosystem at place, they can introduce product extension such as
solar refrigerator, solar-based farming equipment's, or any other based on market need of the
consumers, through the help of SELCO India’s innovation department, that way they will be
able to provide services, even if their customer demands decrease for PV systems.
 They can also tie up government for providing PV systems for government buildings as
government might want to symbolize to people that they are working toward sustainable
energy by using solar energy as a power source.

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