Sandeep Alse is like any other farmer in the medium-sized village of Lohara in Parbhani district of Maharashtra. He is one of the 779 people employed out of the total population of 1,240. He jointly oversees the cultivation on his 80-acre farm with his elder brother. The variety of crops that bloom across his fertile piece of land include guava, orange, sweet lime, tomato, cucumber, water melon and custard apple. He has no laments towards the rain Gods or the district administration. Everything seemed to follow the path of normalcy till the harvest season. “I would end up having to sell my produce right after harvesting often at a very low cost. I had no facility to store my produce post-harvest and sell it later so it could fetch me a higher price,” he recalls.
Storing his vast quantity of produce involved renting a vehicle and ferrying his stock 100 km to Jalna or over 200 km to Nashik or Aurangabad. The exercise that involved charges for loading, unloading, renting space, and vehicle rent would leave him Rs.3,000-Rs.5,000 poorer each time. At times, the cold chain prices at these places would be hiked exorbitantly during the peak season. All this drove the young farmer to browse for micro cold storage options on the internet and he did find a few, but it wasn’t the cost that deterred him as compared to the fact that they required uninterrupted electricity whereas Alse’s village had a record of 18-hour power cuts. That’s when he searched for unconventional options and found a perfect match in a solar-powered micro cold room, Ecofrost. “What I liked the most was the fact that it runs on solar power. It allows me to store up to 5-6 metric tonne and I can put multiple fruits at a time. The Android app on my phone can direct me via images on how to set the correct temperature. Even an illiterate farmer can use this,” he chips in excitedly about his recent purchase. He claims that his income has increased by at least 30% in the past few months since he purchased the micro cold storage.
This innovation is the brainchild of an IIT-Kharagpur trio Devendra Gupta, Prateek Singhal and Vivek Pandey. What started out as an experiment to discover more ways to harness solar solutions materialised as their company’s main product. The three mechanical engineering students interned at companies where they worked on energy efficient solutions. “That experience introduced us to the potential of solar energy, made us realise that we need to set up our company to have the freedom to experiment and also each of us had complementary skills like Deven was interested in controls, Vivek was keen on heating, ventilation and air-conditioning,” says Singhal. Thus, the three set up Ecozen Solutions in 2010 and conducting an energy audit of their alma mater’s campus became their first project. Enthused by the response of the director and a Rs.1.2 lakh investment they began fortifying their plans.
Follow the blueprint
First, each pooled in around Rs.5 lakh amounting to Rs.15 lakh and began work on a prototype for solar micro cold chain rooms and solar water pumps. They launched a couple of pilot projects in farms across north India while also perfecting their business model for pitches at start-up competitions. “We did experiment with solar rooftops for an industrial unit where there was savings on energy bills but the real satisfaction comes from the value we created for small-time farmers, which happened with the solar pumps,” adds Pandey. All this while they bagged cheques at competitions in IIT-Bombay, IIM-Ahmedabad, Stanford University and several others. A seed fund by social enterprise incubator, Villgro, STEP and all the other prize money that amounted to Rs.60 lakh kept them going till then. Finally in May 2014, they launched the solar-powered micro cold storage.
A portable cold chain room that accommodates 5-6 metric tonne of produce is small enough for a single farmer. It can be monitored remotely by the team and can be operated via an Android app by the farmer. The unit relies on solar panels of 2.5-3.5KW and stores power using thermal energy rather than conventional batteries and can last for 36 hours in case of cloudy weather. One unit costs Rs.12.1 lakh and installation and other costs can take the final unit cost to Rs.15 lakh-16 lakh. Farmers usually avail of a NABARD or a state government scheme that pays around 50%-70% of the cost to the banks, in case the farmer has secured a loan. In case the farmer has paid the entire cost upfront, it takes about six months for the subsidy money to reach them. Ecozen has deployed around 45 such cold chain rooms so far and is looking at other developing markets with four units already dispatched to Vietnam and Indonesia for a pilot project.
The Pune-based company’s second bet is a solar-powered water pump called Ecotron that was launched in December 2014 that can be retro-fitted on existing diesel pumps as well. Priced at Rs.1.1 lakh-1.2 lakh per HP, the solar pumping system has the controller to store energy which can be used to power other appliances such as lights and fans when pump is not in use. Farmers typically use agricultural pumps that either run on electricity or consume diesel. Long power cuts in rural areas and high fuel prices make it unviable for farmers to use them. “The electricity board doesn’t allow for longer cables to be set up and I have a 10-acre farm. Also, there is no certainty on power cuts,” explains Yashwant Mishra, a rice farmer in Abhanpur taluka in Raipur, Chattisgarh. Mishra, who purchased a 5HP Ecotron pump ended up paying only Rs.70,000, as the rest of the amount was subsidised as part of a NABARD scheme. The farmer who initially could sow only one crop a year has now begun sowing wheat and two other pulses in addition to rice and claims to have a 50% increase in income along with a reduction of Rs.5,000-Rs.7,000 a month in his electricity bill. Farmers often pay a fixed amount for the electricity used based on the HP of the electric pump deployed since villages don’t have electric meters.
Ecozen has sold 400 such pumps so far and currently provides maintenance services in Maharashtra, Chattisgarh and Madhya Pradesh. It has filed for eight patents related to both its products that are currently pending approval.
Taking the heat
There are currently 19 solar pump manufacturers in India with several companies working on pump controllers such as Tata Power Solar and Swedish MNC ABB’s Indian arm. As for the retro-fit market, there are again four to five players who provide that feature. Yet, Subhadeep Sanyal, principal, Omnivore Partners, remains confident of Ecotron’s differentiation. “Ecozen’s solar pump is a perfect mix of power electronics and thermal engineering. Their strength lies in their R&D and innovation capability. Along with catering to the retrofit market, they also have a portable battery that can store the excess solar power generated by the panels, when the pump isn’t running,” says Sanyal. Power electronics is a high power circuit design that improves overall efficiency, ensures lower wastage while converting and controlling flow of electrical energy. Ecozen claims it is the only solar pump manufacturer with a controller that has advanced predictive analytics, which ensures highest uptime and lower maintenance costs.
Godrej Agrovet-backed Omnivore pumped in $1 million in the cleantech firm in February 2015. As for cold storage units, there seem to be few players catering to the rural market. “The bulk cold storage manufacturers are missing out on smaller markets nearer to growing areas, for perishables such as vegetables, fruits and flowers,” Sanyal adds.
A key constraint is the capital cost of the pumps. Sanyal concedes that the costs are high currently. While a 5 HP diesel pump costs around Rs.50,000, Ecotron’s 3HP solar pump costs Rs.3.2 to Rs.3.5 lakh and 5HP pump costs around Rs.5 lakh depending on customisation options. Gupta admits that while solar panel costs have reduced significantly over the past few years, they remain the most expensive element. Ecozen imports high efficiency panels and sources the rest from local players. Given the product design, they claim that they will be able to reduce costs once the volume of production increases.
Farmers across the country are currently availing this cleantech pump through NABARD and some state government schemes. “The market potential for solar pumps in India is 10-12 million and we have about 100,000 on the ground now. A reduction in the unit cost would certainly help and so would financing options. Schemes announced by state governments are very ad-hoc and amount to only a drop in the ocean. A reduction in solar panel costs may significantly help the manufacturers in reducing the unit cost,” explains Vinay Rustagi, MD, Bridge to India, a solar power consultancy firm.
News reports in May this year talk about MNRE secretary, Upendra Tripathy’s letter to banks lamenting on the weak adoption of solar pumps. MNRE set up a credit-linked capital subsidy programme in 2011 under which the farmer is required to pay 20% of the cost of pump and can borrow the rest of the amount. Once half the loan amount is paid, the rest is accounted for by the subsidy paid by the ministry via NABARD. However, requirement of collateral has deterred farmers from availing this central government scheme.
Turns out the price tag on the cleantech products are not the only challenge that the entrepreneurs face. “Initially, selling a new idea is difficult even if it makes sense to people. The minute you talk about investing money, they begin calculating the risks,” says Gupta. Ecozen does its bit by taking farmers to demo sites and connecting them with other users to drive home the benefits of their products. Pandey highlights one such incident when they installed a micro cold storage unit in a market in Kanpur. “We had set it up for flower sellers who could store the stock in the cold chain and earn the same price even two days later. But, there was one farmer who asked, ‘Fridge mein kaun rakhta hai?’”, says Pandey. This is why Ecozen involves village level entrepreneurs and local admin heads such as a village sarpanch to educate the farmers about the benefits of the product.
In addition to selling directly to farmers, they also sell to contractors who will set up the equipment and ensure maintenance. Ecozen is also looking at setting up community models for the cold storage, such as setting up in local markets where the cost is jointly shared or renting out the unit on a quarterly basis.
The focus is also on expanding into new markets. “We might look at states like Rajasthan, Tamil Nadu and Karnataka,” says Singhal. They have started initial sales in these states and are currently in the process of building a distribution network. Bridge to India’s Rustagi thinks Ecozen is better off growing state by state. “There are very few solar pump manufacturers who have the ability to present pan India. Thus, they must focus on their regional geographies first, build extensive service networks and then expand to other states.” As for cold storage, the market is currently just developing with very few players providing cold storage solutions for the small farmer. For instance, Lloyd Insulations has a Lloyd SolerCool that can accommodate up to 3-4 tonne and costs Rs.9.5 lakh.
A 2014 report by the World Economic Forum on food wastage in India highlights that while the country is the second largest producer of fruits and vegetables in the world (after China), it tops the list in terms of wastage. This results in fruits and vegetables costing twice as much as they would otherwise. The same report points out an IIM-Kolkata report that cold storage facilities are available for only 10% of perishable food products leaving 370 million tons of perishable products at risk. Thus, Ecozen’s cold storage solution clearly has a market for Ecofrost, but for now funding options for farmers continues to be an impediment.
Ecozen, which recorded a revenue of Rs.9.5 crore in FY16, intends to maintain the growth momentum and currently has a 90-member team working towards it. While Ecotron accounted for a 70% share of the revenue, the focus is on increasing the contribution from Ecofrost sales as well. And they hope to achieve that with constant innovation. The ultimate aim, given that all devices are connected to the internet is to work on a connected cold chain unit. They are testing equipment for this purpose currently.
“As engineers, we love to innovate, that is what stimulates us,” says Gupta.