Business Plan-global_power _solutions

8/3/2019 Business Plan-global_power _solutions

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GLOBAL POWER

SOLUTIONS

U.VIKHNESH, S.ASWIN

12, PRINCE ROAD

VADAPALANI

CHENNAI

9566144921, 9994785730

G



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],

[email protected]

CONTACT NUMBER: 9566144921, 9994785730

mailto:[email protected]






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.



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.



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



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



& 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



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.



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



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



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



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



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



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



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.

Documents

Business Plan-global_power _solutions