SELCO: Providing Sustainable Energy to the Bottom of the Pyramid Consumers

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Excerpts

Innovative Financing While Hande was successfully installing solar lighting systems for rural consumers, he came across some people who could not pay every month, sometimes every year. The deeper he penetrated the rural economy, the more obvious it became to Hande that site-specific and flexible financing was needed. Daily wage earners, for instance, could return 18 cents a day but not 54 cents every three days. But banks did not have the infrastructure to collect money on a daily basis...

In late-2008, SELCO aimed to serve the urban poor market in India. Hande started with a small village in Manipal town in Karnataka. He noted that the poor people had migrated from different states in India and were living illegally on government land. Though these people had some income, they could not afford the solar lighting system. It was reported that they spent US$ 1 per liter of kerosene, which could be used only for cooking. The SELCO team conducted research and found that these people were willing to buy solar lighting systems in installments. But they could not get access to loans as they could not provide any collateral....

While most of the companies aimed to sell their products to the BoP considering them as a niche segment to target and reap profits from, Hande had a different take on the BoP market. “The fortune at the bottom of the pyramid’ is an extremely vulgar [phrase] that is going around. [Companies] always think of selling to the poor. Instead, they should focus on creating “reverse supply chains” in which the rich buy from the poor. Until that happens, it is an unsustainable situation.” From the time he completed his studies in energy engineering, Hande had been thinking about how to serve people belonging to the BoP...

By mid-2012, SELCO had set up 135,000 solar lighting systems in India. It was committed to reaching its target of serving 200,000 rural households by 2013. The company also aimed to achieve revenues of US$ 4.36 million by the end of 2013-2014 and US$ 5.45 million by 2015.

Though SELCO was a for-profit social venture, poverty reduction remained central to its goal. Hence, Hande felt that scaling up would shift the company’s focus away from its social mission. The only way he wanted to scale up was by finding the right person to replicate its business model in each state with their support...

Exhibit I: The Electricity Problem
Exhibit II: SELCO'S Marketing Initiatives
Exhibit III: SELCO' Financials (in US$ Millions)
Exhibit IV: List of Awards and Recognition for Hande and SELCO
Exhibit V: A Brief Note on the SELCO Solar Lighting System
Exhibit VI: A Brief Note on the SELCO Foundation
Exhibit VII: SELCO's Business Model for Rural Lighting

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