Envirofit india case study summary

"Building Business Cases to Reach Scale: A Study on Biomass Cookstove Business Models in Asia and Africa"

CASE STUDY

ENVIROFIT -­‐ INDIA

Company's stage of development: ENVIROFIT India is currently in expansion with a re-­‐ designed Business Model. Centralized roduction in Indiathrough one high-­‐mechanized factory. Serving the national market since January 2009 and exporting to Nepal since April 2014. Cookstoves are designed to meet the diverse cooking needs of Indian families.

ENVIROFIT India is currently engaged in the manufacturing, distribution and sales of other energy efficient products (stove accessories like pressure cookers & solar lighting).

Product: Industrial production of a portable, single pot stove with insulated vertical chimney, usually constructed from metal, any biomass fuel can be used. Saves up to 50% of fuel compared to traditional stoves. (G-­‐3300 Wood & B-­‐1200 Wood), 65% Reduction of CO, 80% Reduction of smoke & toxic emissions, and 40% reduction of Black Carbon Price: Fixed price 30.5 USD nationwide.

Sales: An estimated 400,000 units sold between from January 2009 to May 2014

Investments are done at different levels: • Monitoring, reporting and verification (Carbon Credit) • ENVIROFIT India Officer sitting in the Unit of Production -­‐ Manufacturer (quality standards and quality control) • Training to the Officers of the MFIs and NGOs – Incentive mechanism to best seller, they become promotion officers All investments along the Value Chain are financed by Commercial Loans and Microcredit by local MFIs Channel strategy: solid partnerships with reputable NGOs, MFIs and Private Sector (CSR), retailers, cooperatives of producers.

ENVIROFIT India facilitates the supply chain, outsourcing all services Company reported figures: Carbon finance – Carbon Credits, registered in 2012 & Carbon Offsets – VERs, CERs & Gold Standard. ENVIROFIT India holds a loan from IntelleGrow for an 18 months period (2013 -­‐ 2014).

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HISTORY

India

Established in 2008 as a subsidiary of ENVIROFIT International.

Vision: A Social Enterprise that aims to develop and distribute clean technology solutions that improve health, livelihoods, and the environment while enhancing energy efficiency across Asia.

Design is done in collaboration with engineers at Colorado State University (US); the Clean Cookstove was tested in their labs to ensure that it reduced emissions.

Mission: ENVIROFIT specializes in the design, development, and production of improved biomass cookstoves. As the first organization to brand improved cookstoves in the Indian market, they offer high quality cookstoves in the industry with a warranty on all the products.

Partners: Corporations • Participate in improved cookstove distribution through CSR activities • Make an impact among employees and local communities • Invest in a social program with a local impact that offers both societal and financial returns • Work through ENVIROFIT's carbon-­‐based large scale programs or non-­‐carbon-­‐based programs Microfinance Organizations • Play a key role in creating financing mechanisms for improved cookstoves • Provide loans for customers to buy improved stoves from the nearest retail location • Reach larger communities in rural and urban areas Government Institutions • Tribal Development • Forest Conservation • Low Cost Housing • Mid-­‐Day meals • Rural Development under Women and • Child Welfare Non-­‐Profit Organizations

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• Distribute lifesaving products • Encourage women's empowerment • Create a sustainable program with a revenue stream that can be reinvested into other programs • Work with ENVIROFIT independently, through loan-­‐based structures or through CSR initiatives Online partners ENVIROFIT is selling internationally through Amazon & Evan's Outdoor Store (http://www.evansoutdoorstore.com) Organizational Structure and Management Team leaded by Mr. Hachan, Executive Director. Team includes one Marketing Manager and Head of Sales for West India, one Logistics Manager, once Finance Manager, and one Manager of Operations and Business Development. They have received recognition in several programs including MNRE and USAID ENVIROFIT India outsources all services of the value chain from different partners. All partners are legally registered businesses or organizations, and ENVIROFIT India signs MoUs bilaterally with all of them.

Ownership of Business Units – partners All partners are specialized in their field of work (manufacturing, logistics and distribution, microfinance, saving & credit women groups, etc.)

ENVIROFIT India assists all their partners with Supply Management as well as support in marketing and distribution of ICS: • Specialized pricing for larger orders • Comprehensive training on cookstove use and demonstration skills • Customized training materials in the regional language • Regular field visits to monitor stove usage • Support for warranty claims during the warranty period • Assistance in developing carbon based programs for dissemination of improved cookstoves Funding: Sources of funds are grants (Shell Foundation), awards, Carbon Credits, loans, and revenue from sales of ICS. ENVIROFIT currently offers the option to participate in their carbon program to increase cookstove adoption across the APAC region (partnership can be established with ENVIROFIT through purchase of carbon credits)

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THE BUSINESS ENVIRONMENT1: India has grown to be the third largest economy in the world (in Purchasing Power Parity -­‐ PPP -­‐ terms) and its population of 1.2 billion presents an enormous market opportunity for emerging businesses.

Growth has not been equal and large challenges remain: 35% of its population lives on less than $1.25 a day, health and educational outcomes remain on average low, physical infrastructure is weak, and access to energy is a challenge for the majority of the population.

Solid fuels remain a critical part of the energy formula for many households. 67% of households (equivalent of 166 million households) use solid fuels as their primary source of cooking fuel. Conversion to modern fuels has accelerated only in urban areas.

The use of solid fuels and inefficient cookstoves has had significant impacts on health outcomes and livelihoods, particularly for women. 400 million people in India (of which 90% are women) are exposed to the negative health impacts associated with indoor air pollution from inefficient cookstoves, resulting in respiratory, pulmonary and vision problems. In addition inefficient cookstoves and practices entails that women spend up to 5-­‐8 hours per day on cooking activities, with 20% of that time devoted to the collection of fuel.

Despite the large market potential, there are a limited number of players in the market and few have reached scale. There are a wide variety of cookstove technologies on the market – ranging from basic improved cookstoves to renewable energy solutions. While there is a thriving and growing set of private sector actors (and NGOs), the majority are small and have yet to scale up to meet the magnitude of the problem.

Donors and multilateral agencies are scaling up their efforts in ICS industry. New initiatives such as the National Biomass Cooking Initiative and National Clean Energy Fund have sought to incorporate lessons learned from the prior policy initiatives and are focused on enhancing the role of the private sector, but have been slow to start. Cookstoves have become a popular focus area for donor agencies and multilateral programs and new programs on supporting research, financing and implementation are beginning to emerge.

High potential for ICS industry to become an attractive opportunity for the private sector and an impactful mechanism by which to improve health outcomes and livelihood opportunities for millions of households. In order to scale up support is required in: (i) facilitating greater partnerships between stakeholders and sharing of knowledge within the sector, (ii) developing and promoting acceptable and minimum standards for stove performance, (iii) promoting awareness of cookstoves and the positive benefits they hold, and (iv) providing and promoting a wider base and diversity of financing options available to both consumers and suppliers.

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From the document "India Cookstoves and Fuel Market Assessment", by DALBERG Global Development Advisors on behalf of the Global Alliance for Clean Cookstoves, it dates from February 2013

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SWOT Analysis

STRENGHTS

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Strong leadership Strong managerial and technical skills Manufacturing facilities can increase production easily according to demand (but with limitations) Registration and recognition by Indian Government. Partnership with government agency (national as well as local) is critical to navigating the complex political and regulatory environment of India Strategic partnerships with well established organizations (MFIs, SACCORs, CSR, government agencies, etc.)

"Indian product" Good monitoring and evaluation systems Monitoring of centralized project has a more efficient transaction costs of carbon finance.

Strong support service providers (Post sales service and product warranty for two years) Market access strategies very diversified Market information and industry knowhow: customer insight, business model

WEAKNESSES

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Business model and distribution channels built from scratch Business model might find difficulties operating at larger scale Limited access to capital Weak link between BoP producers and end demand (build through partnerships -­‐ high dependence on the performance of the partners and their sources of funding -­‐ mostly ODA) Weak customer, producer and channel awareness of new market-­‐ based solution and appreciation of its benefits.

Project management -­‐ Complexity due to the project engineering -­‐ (Carbon Finance) Role of women remains marginalized. Women not integrated into design and dissemination strategy.

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OPPORTUNITIES •

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• •

Facilitate cooperation within the sector: share effectively in terms of lessons learned, best practices, research, etc. In order to strengthen the industry Further work on bringing partners to the value chain, widen network of target consumers and distributors.

Developing and promoting accepted standards: there is a current need of performance standards Large market potential High number of IAP related deaths creates a strong case for change Women empowerment can bring a shift to the sector Significant livelihood improvement opportunities, particularly for women Diverse cookstove sector in terms of technologies and variety of products present Entrepreneurial culture with many active community organizations Improving general awareness of the problem will help the development of the market Additional work on access to carbon finance might bring more players to the sector ENVIROFIT's partners are currently giving women a central focus for when implementing their strategy.

THREATS • • • •

• • •

• • • •

Infrastructure still a challenge Challenges in identifying partners for distribution to rural areas.

Absence of national quality standards favours lesser quality cookstoves to gain market Increase the availability of and access to testing centres -­‐ currently expensive and arduous process. That will incentivize players to invest in ensuring their products are up to standard Customer awareness need to be created Limited access to working capital, limited financing available to the sector Market recovering from subsidies and "donations" of government policy through national program. And in general variable government policies Other sources of cooking energy (LPG) Current demand for carbon credits is minimal Carbon markets are in a transitional period, waiting for the new international agreements in 2015 An inclusive industry needs to be built: diversity of firms and healthy competition will bring greater value for customers

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BUSINESS MODEL: (through Value Chain Analysis)

ENVIROFIT VALUE CHAIN

Distributor (x1)

NGOs Coopera CSR tives (IVDP)

VALUE CHAIN

ENVIROFIT signs contracts with: End Users • The Industrial producer • Distributor • Partners (MFIs, NGOs, CSRs,...)

MFIs (Fullerto

Industrial Producer (x1)

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