With a Make-in-India dream, here’s how Virtual Forest is helping build energy efficient appliances

India has a unique situation when it comes to electronics. While it has a huge consumer base for air conditioners, washing machines, and now electric vehicles, as well as sufficient industrial capacity to manufacture these devices and the supply chain to get the raw materials to manufacturing facilities.

Yet, most motor controllers – devices that regulate the operations of motors used in these appliances – are manufactured outside India in countries such as China and Vietnam. India lacks the R&D capabilities in this niche area, making it dependent on imports.

Founded in 2019, Virtual Forest is among India’s fastest-growing electronic systems design and manufacturing (ESDM) startups. It is tapping the increase in demand for energy-efficient appliances by providing Made-in India motor controllers and human interface electronics, enabling the local manufacture of cost-efficient products as compared to the imported ones.

“A shift from regular appliances to energy-efficient appliances such as inverter air conditioners, washing machines, and refrigerators required a complete technology change,” Omer Basith, Co-founder and CEO of Virtual Forest tells YourStory.

Virtual Forest’s founders – Omer, Sandeep Kejriwal, Nazir Tolagi, Ravi Sajjan, and Gajanana Palkar – have worked in the manufacturing, IT/ITES and electronics industry for 20 years.

The main thesis behind Virtual Forest is that combating climate change is the biggest driver of our generation, adds Omer.

“It was very important that the time that we were all at our previous roles have started doing something to impact this particular change. Later, we decided to start with addressing this particular shift for energy-efficient appliances, and energy-efficient motor applications,” explains Omer

According to Omer, close to 65 percent of residential energy is consumed by motors. The first step to combat climate change is opting for energy-efficient tools.

The startup first worked on building electronics for air conditioning equipment. From ACs, it went on to develop technologies for other appliances like ceiling fans, inverter washing machines, and other energy-efficient appliances.

Last year it entered the electric vehicle market.

The origin

The name – Virtual Forest – comes from the idea that the startup builds electronics that will prevent carbon dioxide from being released into the atmosphere due to lower energy consumption. This is akin to forests absorbing carbon dioxide from the environment.

“Like every single tree reduces the amount of CO2, every single device that we put into the market will help mitigate CO2 and the more devices we have, it will be similar to building a virtual forest,” said Omer.

The startup designs and develops motor controllers and human interface technologies for several top consumer durables brands in the industry including IFB, Crompton Greaves, Voltas, among others.

It had partnered with a large European technology company to locally develop and produce EV Motor Controllers to serve the growing two and three-wheeler electric vehicle segment in India and abroad.

Virtual Forest designs have been in high volume commercial production for a little less than two quarters, and the startup claims it delivered a gross manufacturing value of over Rs 50 crore in FY 2022.

ALSO READ

For a smarter future: how 75F is leveraging IoT to make buildings energy efficient in India

Business model

The company has built a unique business model to pursue its mass production. It owns no factories or manufacturing facilities or has invested in any facilities. It borrows the existing infrastructure in the country on contract basis.

Virtual Forest contracts with manufacturers and supply chain providers for mass production while it looks after the research and development as well as sales side of the business.  

“We have been able to create partnerships with large manufacturers in India and they operate as our contract manpower. So we enable our design and the production line with them, we get it manufactured with third parties, that means supply to our clients.” explains Omer.

The other model is licensing its IP to manufacturers. Thirdly, the company has two R&D contracts with a blue chip appliance manufacturer.

He further added that “We have been able to grow rather quickly without building physical capacity and also our expansion is not dependent on linear capex (capital expenditure).”

Founding team

The startup has a 25-membered team with close to 17 of them being in R&D.

Omer, as the CEO, is responsible for driving strategy, product and business development. Prior to starting Virtual Forest, he was the CEO of Solid State Systems – a company manufacturing capacitors, and Jossbox – a retail marketing analytics company.

Sandeep, COO and CFO, is responsible for strategy, growth, finance, IT, and overall business operations. He is the former CFO of EMC India (DELL-EMC), and has international experience in MNC manufacturing, tech startups, and global IT/ITES organisations. He has held senior leadership positions at Hewlett-Packard, EXL Service and Goodyear India and Ex-Regional Chairperson of NASSCOM GIC Forum.

Nazir, CTO, is responsible for driving product innovation. Before joining Virtual Forest, he was the Founder/CEO of Think Circuit Technologies. In the past, he has worked with TCS and ECAD Technologies.

Ravi, the head of Engineering - Hardware, leads the R&D for Motor Controllers. Prior to Virtual Forest, he was the Co-founder at Think Circuit Technologies. In the past, he has worked with ECAD Technologies, and Eaton – the global technology leader in electrical systems for power quality, distribution and control.

Gajanan, the Head of Engineering - Software, leads the R&D for Software Engineering. Prior to Virtual Forest, he was the Co-founder at Think Circuit Technologies. In the past, he has worked with EMC and Intel.

Funding and market opportunity

The startup raised its first round of funding from Napino Auto and Electronics Ltd against a 16 percent equity stake in August 2020.

The company is currently in the process to raise Series A funding within this year and plans to raise its team total to 100.

Virtual Forest, aiming to be a Make in India and Made for India brand, competes with imports largely from China. Along with this, it suffers from the lack of availability of certain raw materials such as micro chips and power electronics in the country.

Currently, only 40 percent of the raw materials the company uses are sourced in India.

The total addressable market in India is about $160 million, explains Omer. This is expected to grow up to almost two and a half-billion dollars for the Indian market by 2025 or 2026.

He further adds that the global market for motor controls is currently around two and a half billion dollars and will grow to around $16 billion globally by 2025.