The document is a feasibility report submitted by Team Spartans of IIM Ranchi analyzing KEC's potential entry into the solar mounting structures market. It analyzes the market potential and viability for KEC. The report finds that the solar market is growing rapidly in India and Asia Pacific due to supportive government policies. It recommends that KEC enter the market by partnering with EPC contractors to leverage KEC's brand and ensure consistent orders, while individual contracting may provide higher margins but also more risks.

1. Submitted by:
Team Spartans , IIM Ranchi
Team Members
Priyesh Thakur priyesh.thakur13@iimranchi.ac.in 7762923894
Krunal Patel krunal.patel13@iimranchi.ac.in 9546528969
Ashutosh ashutosh13@iimranchi.ac.in 8252482338

2. Executive Summary Feasibility Operations Financials Entry Strategy
Feasibility Operations Financials Entry Strategy
To identify technology
and markets with
significant potential and
conduct feasibility
analysis for KEC
To analyze the value
chain of KEC and
ascertain the new
business fitment
To analyse the
investments, and earning
potential in entering the
solar structures segment
To suggest a viable
business model for entry.
• Analyzed the market
potential for CSP and
PV structures.
• Also , did a viability
study based on fixed
tilt and tracker based
structures.
• Examined the export
markets.
• Identified the types
of angles used for
solar mounting
structures.
• Analyzed the inter-
linkages between
various
components of the
value chain.
• Calculating KEC’s
market serving
capacity based on
its excess capacity
and government’s
growth projection
• Projected revenues
based on excess
capacity of KEC
• Analyzed the
contractual models
used in solar
projects.
• Pros/Cons of
choosing different
contractual
structures to enter
the market.
• PV is dominant
technology used
across countries.
• Fixed tilt will be
preferred over axis
trackers in emerging
markets due to lack
of expertise.
• APAC is the preferred
export market.
• It is easy for KEC to
enter into this
market given its
existing operational
infrastructure.
• Also, no capex is
required as existing
PPE will suffice.
• With its existing
excess capacity KEC
can serve up-to 7%
of the solar PV
structures market
• KEC excess capacity
can be offloaded
very easily given
the ample demand.
• Entering via EPC is
preferred over
individual bidding.
• Consistent orders
leveraging KEC
brand quity via EPC
overweighs the
increased margins
via individual
contracts.
Analysis
Insights
Strategic
objectives
“Enter solar structures market”Recommendation

3. • Thermal Power generation is facing problems related to mining, import and transportation of coal.
• Project clearances are becoming increasingly difficult due to environmental policies.
69%
2%
16%
13%
Thermal
Nuclear
Hydro
RES*
*Note : renewable energy sources(RES) is primarily wind energy with only 0.1%
constituting solar energy.
Source: Rajya Sabha Unstarred question no. 58 dated on 07.07.2014
Sector-wise Power Generation Capacity in India (As
on 31.05.2014)
12039
7530.2
14507
20359
9263
3453.7
9585
12160.5
0
5000
10000
15000
20000
25000
2007-08 2008-09 2009-10 2010-11
Target
Achievement
Target and achievement of Power generation in India (2007-08 to 2010-11) (in Megawatt(MW))
Source : Lok Sabha Unstarred
Question No. 1757, dated on
23.03.2012.
India has a huge energy deficit and is overly dependent on traditional thermal power generation
Executive Summary Feasibility Operations Financials Entry Strategy

4. Proposed roadmap for JNNSM ,India 2010
Executive Summary Feasibility Operations Financials Entry Strategy

5. SOLAR Technologies
Photovoltaic Systems(PV)
•Solar PV panels use photovoltaic cells to convert solar radiation into direct
current electricity.
•Mounted on roofs of commercial and residential buildings.
Concentrated Solar Power Systems(CSP) :
•CSP use mirrors or lenses to concentrate a large area of sunlight onto a small
area which drives a steam turbine to generate power.
•Large scale plants spread over several acres.
Fixed Tilt Systems:
•Inclined at a fixed angle from the ground.
•Less efficient, cheaper, require less land.
Single and Dual Axis Tracker Systems
•Trackers have the ability to track the sun through the day to maximize
incidence on the panels.
•Dual axis trackers have the additional ability to account for the rotation and
revolution of the earth for better tracking.
•More Efficient, Costlier, and require more land.
MARKET CLASSIFICATION TYPES
*Customer segmentation only for PV as CSP are only on grid projects
Executive Summary Feasibility Operations Financials Entry Strategy

6. IFC(International Finance Corporation) in its publication “Utility Scale solar power plants: A guide for
developers and investors, 2012” mentions the following about Fixed tilt vs. Axis tracking systems :
“Since fixed tilt mounting systems are simpler, cheaper and have lower maintenance requirements
than tracking systems, they are the preferred option for countries with a nascent solar market and
with limited indigenous manufacturers of tracking technology such as India.”
As per Bridge to India – India Solar compass July 2013 report:
“Out of the total 1,746 MW installed in India , only approximately 80 MW use some form of axis
tracking technology.”
Bridge to India Pvt. Ltd. did a financial analysis to calculate EIRR for Fixed tilt vs tracking systems and
following were the results:
Marginal for Horizontal Single Axis and Dual Axis
for Vertical single axis in Indian conditions.
Marginal increase insufficient to justify additional costs and
risks involved with tracking systems.
Over Short to Medium Term Horizon (2-8 Years) Fixed Tilt Systems will dominate over axis trackers
Executive Summary Feasibility Operations Financials Entry Strategy

7. 0
10000
20000
30000
40000
50000
60000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
MW
Annual Installed Capacity-Region
middle east latin america asia pacific euprope north america
Potential Export Markets
• By 2020, APAC solar market share to grow
from 42% to 47%
• MEA region & Latin America are in the
development /growth stage which requires
rapid capital investment both public and
private.
• Favourable solar incidence expected to
boost MEA region
• MNCs domination through investment in
integrated value chain
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
BillionUSD
Revenue
• Market revenue expected to grow to USD
137.02 billion from the current USD59.84
billion(2013)
• Europe to see an expected decrease in
terms of revenue on account of increasing
assessment of green energy targets
• The global solar market is likely to recover in
2014 with a further increase in the
remaining forecast period
Executive Summary Feasibility Operations Financials Entry Strategy
Asia Pacific region is an attractive solar export market
Frost & Sullivan Global Solar PV report

8. 0%
20%
40%
60%
80%
100%
120%
0
5000
10000
15000
20000
25000
30000
MW
APAC Installed capacity and growth
Capacity Growth Rate
0%
20%
40%
60%
80%
100%
0
20
40
60
20102011201220132014201520162017201820192020
BillionUSD
Revenue USD billion
Revenue USD billion Growth Rate
APAC market – An analysis
• By 2020 20 GW is expected to be
installed every year
• The APAC market is expected to grow to USD
54.72 billion with a CAGR of 13.6%
• China market is dominated by EPC
participants that are well integrated across
the value chain
• The Market development depends on the
ability of market participants to influence
policy makers to define supportive legislation
0
10000
20000
30000
20102011201220132014201520162017201820192020
MW
APAC installed capacity
country analysis
Rest of APAC Australia Japan India China
• Delay in implementation
of policies
• Huge emphasis on
thermal power projects
• Intense competition
• Declining price of solar
module
• Governments policy
support
• High solar radiation
• Manufacturing base
Drivers Restraints
Executive Summary Feasibility Operations Financials Entry Strategy
China leads the solar market in both growth rate and size among APAC countries
Frost & Sullivan Global Solar PV report

9. KEY STATES
TARGET SEGMENT
 In APAC, of the two technologies, solar
PV power revenue share was 99.6%.
CSP Projects are few and far between in
APAC due to technology maturity, paucity
of funds, and unavailability of large land
area with strong sunlight.
TARGET EXPORT MARKET
Executive Summary Feasibility Operations Financials Entry Strategy

10. 60 tonne steel is
required for 1 MW
capacity solar plant
Capital cost for steel
mounting structure is
Rs.50 lakh/MW
Solar structure is priced at Rs. 0.833 lacs per
tonne
CERC’s analysis on BenchmarkCapital Cost for Solar PV Power Projects
Executive Summary Feasibility Operations Financials Entry Strategy
C purlins
Types of steel angles used in solar structure
I beam
Clamp
Bracket
Z purlins

11. Inbound
logistics
Operations
Outbound
logistics
Marketing
and sales
After sales
Procurement
Technology
Human
Resource
Infrastructure
Existing suppliers
Existing assembly line CRM
Labour General Management New sales force
Existing plant Carriers
Solar EPC
customer
Individual
solar project
customer
R
e
v
e
n
u
e
KEC
Executive Summary Feasibility Operations Financials Entry Strategy

12. Revenue projections
Executive Summary Feasibility Operations Financials Entry Strategy

13. EPC
players
Solar
module
Mounting
Structure
Inverter
supplier
Solar
module
Mounting
Structure
Inverter
supplier
Solar
power
project
Contractor 1 Contractor 2Owner
Executive Summary Feasibility Operations Financials Entry Strategy
Consistent orders
Can leverage KEC brand
Consistent payments
Low sales effort
Pros Cons
Comparatively low margin
Higher margins
Pros Cons
Lack of visibility to end
customer
Inconsistent orders
Payments depend upon
project completion
Higher visibility of RPG
as a brand
High sales effort
Better capacity utilization
V/S
“Partnering with EPC is the smart choice”

14. Thank you