EcoChula - Foster School of Business

Report
Global Social Entrepreneurship
Competition 2013
…improving health, one village at a time
Meet Asha
Indoor Air Pollution- A Global Health Threat
Afghanistan
Liberia
Congo
Paraguay
The Solution: Eco-Chula
A self -sustaining energy system that combines an economic cook stove with locally
derived cheap, renewable biogas fuel
•
Economical
•
•
More efficient cooking
Cleaner Air
Business Model
Bio-mass
Refill
Improving
health
with gas
Distribution
Bio gas
Cook stove
Why health has not improved
Stove:
High price and low
efficiency
Distribution:
Fuel:
-Not accessible
-Not convenient
-Uneducated
people
-Biomass
-Wood
-Kerosene
-Dung
Business Strategies
2014
2015
6 villages of
Jamalpur
Jamalpur
District
375 Families
470,000+
families
Improves:
- health
- environment
Improves:
- health
- environment
2016
Adjacent
districts of
Jamalpur
3.3 M+
families
Improves:
-health
-environment
2019
Bangladesh
20 M+
families
Improves:
- health
- environment
2024
Global
expansion
600 M+
families
Improves:
- health
- environment
Partnerships and Resources
Management Team
Shamroze Nurul
Abedin
CEO and Director of
Public relations
Organizations
Global Alliance for
Clean Cookstoves (GACC)
Bangladesh Rural Advancement
Committee (BRAC)
Bangladesh Council for Scientific
and Industrial Research (BCSIR)
Engineers in Technical and
Humanitarian Opportunities of
Service (ETHOS)
Tamanna Shahnowaz
Sohanee
CFO and Director of
Sales
Asif Iqbal
Director of Productions
and Operations and HR
Advisors
M.R. Khan (Professor, Respiratory
Medicine and Public Health)
Syed Manir Khasru (Finance,
Professor, IBA, DU)
Anwarul Kabir (Civil Engineer,
WFP)
Dr. Md. Abdur Rouf (Scientific
Officer, BCSIR)
Lameya Samin (Mechanical
Engineer)
Imran Nurul Abedin (MBA student)
Pricing Strategy
Price of 1 stove
and 1 biogas
cylinder
• USD 15
Price of biogas
• USD 0.11 per m3
Price Justification:
•
Biogas consumption cost- $36.96
•
Lowest income households spend USD 37 or 15%
Financials
Initial capital requirement: $130,000
Discounted
payback
IRR
172%
2.16 years
NPV
$164,675
Social Return on Investment
SROI $27.11
Medical cost savings- $78 M+
Increase value of environment- $64 M+
Increase income- $13 M+
Create a health
database
Change in quality of life
Problem
Respiratory
illness and eye
problems
Improving air
quality
Vector borne
diseases from
untreated
biomass
Converting
biomass into
clean fuel
Deaths caused
smoke inhalation
Reduces
number of
deaths
Eco-Chula: ….improving health, one
village at a time
Positive Impact on Global Health
Financial Sustainability
Implementation Feasibility
Positive Effect on Quality of Life
Thank you (:
Additional Information
Slide 3: Global Threat
Slide 4: The Solution
Slide 5: Business Model
Slide 6: Why health has not improved
Slide 7: Business strategies
Slide 8: Partnership and resources
Slide 9: Pricing strategy and justification
Slide 10: Financials
Slide 11: SROI
Slide 12: Changes in quality of life
Slide 18: Assumptions
Slide 31: Stove production cost
Slide 19: Pro Forma Cash Flow
Slide 32: Biogas production cost
Slide 20: Pro Forma Balance Sheet
Slide 33: Estimated market size & Market
value breakdown
Slide 21: Pro Forma Income Statement
Slide 22: Investment
Slide 34: Breakeven quantity &
sensitivity analysis
Slide 23: Assumptions
Slide 35: Loan repayment schedule
Slide 24: Reduction in medical spending
Slide 36: Ability to serve client group
Slide 25: Assumptions
Slide 26: Increase in greener environment
Slide 27: Assumptions
Slide 28: Increase in productivity
Slide 29: Discounted payback period
Slide 30: Salary structure
Slide 37: Analysis of stakeholder needs
Slide 38: A comparison with competitors
and barriers of entry
Slide 39: Comparison of different stoves
and layout of market research
Discounted payback
year 1
2
3
4
5
Discounted
cash flow
$
19,578.30
$
79,845.30
$
87,667.75
$
88,593.83
$
90,357.77
Accumulated
Payback
dcf
$
19,578.30
$
$
99,423.60
30,576.40
$
0.16
187,091.35
$
275,685.18
$
366,042.95
discounted payback period in
years
2.16
Salary Table
No. of
employees
year 1
yea
r2
year
3
year
4
year 5
Monthly USD
1
1
1
1
1
246
Purchase Officer x 1
Assembly Worker x 10
Security x 2
Total
Biogas Plant
Project Manager x 1
Plant Supervisor x 3
Security x 2
Day Labor x10
1
10
2
1
10
2
1
10
2
2
20
2
2
20
2
98
30
49
total
1
3
2
10
1
3
2
10
1
3
2
10
1
3
2
15
1
3
2
15
Warehouse workers
BRAC health workers
Driver
10
15
2
10
15
2
15
15
3
15
20
3
15
20
3
184
61
43
37
total
45
50
40
maintenance
total
Office
CEO
CFO and director od=f
sales
Dir, Production and
Operation and HR
Accountant
1
1
1
1
1
40
1
1
1
1
1
1
1
1
1
1
600
500
1
1
1
1
1
450
1
1
1
1
1
285
2758
Stove Factory
Project Manager x 1
stove prod cost
USD
Plastic knob
0.1
PVC Pipe
0.1
Gun Metal Valve
0.5
Ceramic Stove Burner (2 piece)
2
Stainless Steel body
2
Gas Cylinder
7.8
total cost per unit
12.5
13.375
14.31125
15.3130375 16.38495
profit margin 20%
15
16.05
17.1735
18.375645
stove units
Production cost USD
4500
56250
4950
66206.25
5445
77924.76
5989.5
91717.44
6588.45
107951.4247
19.66194
BIOGAS
production cost
Raw Materials
0.26
Production Cost per
unit USD
0.26
0.28
0.30
0.32
0.34
0.36
Production (Units)
262800
289080
317988
349786.8
384765.48
423242.028
Total Production Cost
$ 68,328.00
$80,422.06
$94,656.76
$ 111,411.01
$
$ 154,340.90
131,130.75
There are approx. 150 million people living in Bangladesh now of which 89% use TCS which creates a huge
market of around USD 1.3 billion
Total Population
Users of TCS
Average family size
Number of target families
Yearly consumption/family
Total market value
Industry
Analysis
150,000,000
133,500,000
5 per family
26,700,000
$48.88
*$1.3 billion
ICS
Kerosene stoves
Chimney stoves
Eco-Chula
Purchase of stove is a 1 time investment and 1 gas cylinder of 28m^3 can meet a family’s per month gas needs.
Price of stove with a 28m^3 biogas cylinder= $15
Price of gas per m^3= $0.11
Price of gas consumption for the next 11 months= $0.11*28*11 = $33.88
Total yearly consumption per family= $15 + $33.88= $48.88
Total market value= $48.88*26700000= $1,305,096,000~$1.3 billion
Fixed Cost
Variable cost per unit
SP/unit
CM
Break even
quantity
$
127,500.00
$
12.76
$
15.00
$
2.66
$
47,932.33
$
127,500.00
$
13.66
$
16.05
$
2.54
$
50,236.41
Case
Base
NPV($)
343,627.35
IRR
227%
Best
471,543.41
335%
Worst
259,657.02
155%
$
127,500.00
$
14.61
$
17.17
$
3.03
$
42,093.10
$
127,500.00
$
15.63
$
18.37
$
3.23
$
39,473.68
$
127,500.00
$
16.72
$
19.66
$
3.46
$
36,849.71
Project
Year
Loan
Receipt
0
1
2
3
4
5
6
7
50,000
Balance
Begin. Of
Year
50,000
50,000
42,000
34,000
26,000
18,000
10,000
2,000
Interest
Due
Interest
Payment
Principal
Repayment
Total
Payment
Balance End
of Year
7,750
6,510
5,270
4,030
2,790
1,550
310
7,750
6,510
5,270
4,030
2,790
1,550
310
8,000
8,000
8,000
8,000
8,000
8,000
2,000
15,750
14,510
13,270
12,030
10,790
9,550
2,310
78,210
50,000
42,000
34,000
26,000
18,000
10,000
2,000
Geo-political
Social
Economic
As highly influential geo-political leaders such as union chairmen and
mayors would benefit in future elections by supporting an ecofriendly product like Eco-Chula that creates employment
opportunities for the local community, their support will help EcoChula in reaching its target markets effectively.
As Bangladeshi people are disinterested in purchasing or continuing
to use ICS, even if their health improves, a behavioral change
campaign will be activated in order to educate them about ICS and
its benefits.
Eco-Chula creates employment opportunities, reduces IAP and
improves the overall standard of living. A rise in living standards
would ultimately imply an increase in demand for Eco-Chula and
thereby, provide greater opportunities for Eco-Chula to make profits.
Stakeholder
Rural, peri-urban, urban dwellers
Problem
Unemployment/financial
instability
Health risks
Women
Disempowerment
Health risks
Children
Illiteracy
Health risks
Overall economy
Unstable economy
Natural environment
Deforestation, Greenhouse Effect
Impact of Eco-Chula
Employment for the people
Elimination of IAP and IAP
related diseases
Work opportunity for women
Prevention of IAP related
diseases and harmful effects
Time previously spent searching
for biomass for cooking now
spent at school
Prevention of IAP related
diseases and harmful effects
Lower unemployment rate
Improved standard of living
Wood no longer used as fuel for
cooking
Zero carbon emission
Factors
Focus
Offerings
Grameen Shakti ICS
Social business for
welfare activity
Biomass driven
improved
cookstoves
Foreign and local
NGO’S
Eco-Chula
Donations or charity
Social business
Run on donations to
provide improved
biomass- cookstoves
Short term
sustainability due to
cost and fuel
inefficiency
An integrated,
affordable solution
Sustainability
Short term
sustainability due to
use of biomass
Long term
sustainability due to
cheap biogas resources
Scope
Available in villages
for last 6 years
Not widely available
Expanding to other
villages by 1 year
Customer
satisfaction
Low
Low
High
a) Intellectual Property Right: The intellectual property right will be protected by the
entrepreneurs of the business by applying for patent of the brand name of Eco-Chula.
b) Strong Partnership and Customer Relationship: Eco-Chula has already established an
online partnership with Global Alliance for Clean Cookstoves (GACC), a global private public
organization which provides clean cookstoves to a number of people in areas associated
with high levels of poverty. Eco-Chula also plans to build ties with the people of Bangladesh
in order to build strong customer equity through Bangladesh Rural Advancement
Committee (BRAC) health workers.
Factors
Traditional cookstoves
Improved cookstoves
Eco-Chula
Type of fuel
Wood, kerosene, agricultural
residues
Biomass such as wood,
Compressed biogas
Cooking time
Longer
Quite long
Less
Cost
USD 3-7
USD 15-20
USD 15
Fuel /thermal efficiency
Kerosene:50%
Wood:17.30%
Wood:17.30%
Dung cake :11%
Biogas:66%
Fuel price
USD 4.36/gallon
USD 2.77/Kg
USD 0.11/m^3
Fuel calorific value
Kerosene: 10850/Kg
Wood: 4978/Kg
Wood: 4978/Kg
Dung cake : 2093/kg
Biogas: 4713/m^3
Environmental impact
Indoor air pollution,
greenhouse gas emission
Greenhouse gas
emission
Green technology with no
hazardous by product
Market category
Market size
Primary market
(Families)
375
Geographic
6 adjacent villages of
Jamalpur Sadar subdistrict
Area
7.9 km^2
Disposable income/family
Estimated time to enter the
market
Secondary market (Families)
Phase 1
Phase 2
4,70,000+
3,360,000+
The entire Jamalpur Sadar
District
2,032 km^2
$51-$106 (95%
$59-$109 (95%
confidence
confidence interval)
interval)
2014
2015
8 adjacent districts
of Jamalpur Sadar
19,050 km^2
Tertiary market (Families)
Bangladesh
Global
20,000,000+
600,000,000+
Starting from South
The rest of the
Asian countries and
country
expanding
gradually
147,570 km^2
--
No research done
by team
No research done
by team
No research done
by team
2016
2019
2024

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