Think Change India

[TC-I Changemakers] First Energy to change the way rural India cooks

Vinay Ganti
2nd Mar 2010
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The ThinkChange India staff is committed to providing our readers with interviews with people we believe are at the brink of something special but have for the most part been overlooked by the mainstream media. Readers will be able to see other conversations under our TC-I Changemakers tag.

In this edition TCI-changemaker focuses on First Energy, who spun out of BP and now is an alternative energy startup focused on delivering affordable cooking stoves to rural and tribal India. Vinay sat down with Mahesh Yagnaraman, a founder of First Energy to learn more.What exactly does your organization do?

First Energy is an alternative energy business, catering to consumers in rural and suburban India through an affordable cooking offer branded “OORJA.” Oorja consists of a biomass stove and a fuel – made from pelletized agri-

residue. The stove uses biomass gasification technology, developed and patented with the Indian Institute of Science, Bangalore. The fuel is made from compacted agri-residue. Both come together to form an affordable cooking offer – making a meal for a family of 5 for less than Rs. 5 per meal.Why start this? What personally drove these entrepreneurs to start this?

The business was developed by BP. As part of a strategic review of its businesses, BP decided to exit this business. I along with Mukund Deogaonkar, who worked on the venture within BP came together. Sreeram Thiagarajan and Raymond Moses from The Alchemists Ark,a specialized consulting organization also came on board. All four of us saw that the venture has potential and once done at scale will help bridge the energy divide while providing an energy security alternative and also being environmentally friendly. The clear 3Ps (People, Planet & Profit) potential of the venture drove the team to take on the mantle when a large corporation had decided to walk away from the space.

What do you think is lacking in the sector of your organization’s interest in spite of your intervention?

The policy framework for energy is very lop sided. Subsidies are making fuel unaffordable for the Government and the country. At the same time, the alternative energy subsidies have not led to any adoption of scalable, sustainable alternative energy development.

In the case of the specific business of FE, the company faces twin challenges – cooking gas, LPG, is subsidised to the extent of Rs 290 per bottle and the wrong incentives for biomass power generation has driven up the prices of agri-waste artificially.

Who are the founders and management? What do they do?

The founders are myself, Mukund Deogaonkar, Sreeram Thiagrajan and Raymond Moses. I have been the Managing Director of FE since 2006, Mukund is the Operations Director. Sreeram & Raymond are executive directors on the board and actively support the team through their guidance and coaching.

At the Alchemists Ark, Sreeram and Raymond consult for and add value in sales, marketing, supply chain to several MNCs and large corporates in India and abroad. Raymond is alumnus of IIT Kanpur while Sreeram is an alumnus of IIM Ahmedabad.

I have been at the helm of the business in India since its start in Feb 2006 bringing together an initial team of talented people, and setting up the company. I did my MBA from XLRI Jamshedpur and have a career spanning 19 years in different countries/continents and across strategy, sales, marketing, supply chain and IT implementation at Unilever, Castrol and BP.

Mukund Deogaonkar has been associated with the business from the start and has been the part of the team that was responsible for creating business concept and heads the operations. He has sales and marketing experience for over 17 years in fuels and lubricant industries and has strong proven ability to forge partnerships and relationships across the value chain

How is it funded?

The venture is self-funded at this point by the founders.

How do you measure your effectiveness?

We use the two straightforward metrics of profitably and stoves sold.

Assuming this problem exists in similar forms throughout the world, what unique challenges do you face in fighting it here in India?

India’s energy framework is still very closed and not liberalised. The heavy subsidies makes the entire thing very inefficient.

How do you intend to scale this model going forward? What are the future goals/plans for the venture?

We aim to be profitable this year, at least at the per unit level. In the next 3 – 5 years we want to reach 1 million households. Beyond that, however, like 10 years out we have not thought that far.

What criteria do you use to identify partners/beneficiaries ?

We look at their ability to provide channel or route to market, share the same values and commitment in serving underserved markets, willingness to exercise patient capital, and have the ability to influence or shape policy.

If some one else is starting off on your own sector of work, what advice do you have for him/her?

You have to play for the long haul. We have to think of creating an industry and not just a business. We don’t yet feel we have the right experience to give broad advice for start ups and would humbly state that we are in the learning curve and we are happy to share learnings with anyone on a one to one basis.

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