27th June. We were in Bangalore, high-tech capital of India, in order to visit Selco. Selco is a company that works in the field of solar technology.


Selco is not an NGO but a private company, and more precisely a ‘social company’. Unlike a normal company, whose primary objective is the maximization of profits, the main purpose of a social company is to serve the general interest. Profits are sought after, but only to allow the realisation of their social objective, as a means rather than an end. Selco’s mission is to supply the people excluded from the standard power distribution networks with solar electricity.

In 1993-94, Harish Hande continued his Engineering studies in the USA in the field of energy. During a trip to the Dominican Republic, he saw that people with low income had the choice to be supplied with solar energy and paid the cost of the installation rather than not having any electricity. He made the electrification of the rural environment the subject of his thesis. In 1995, once he obtained his PhD, he went back to India and founded Selco in order to put his theories into practice.

                               Harish Hande

Why did he choose to create a social company rather than a normal company?

Harish Hande’s answer was that the present model of a company, which aims to increase profits for itself, is not viable. This race for enrichment uses a short term vision and generates a fake richness, a fake comfort. In India, the retribution for the present growth (8-9%) is the accelerated deterioration of the environment and the augmentation of the number of poor people, which destabilises the society. Harish Hande quoted Mahatma Gandhi: ‘a business started with the sole aim of making profit is not sustainable’.

Money is a bad master but a good servant. Gandhi also explained that profitability is the only way to make an organisation viable. For Harish Hande, who has always wanted to work in the field of development, the layout of a private company is more efficient than one of an NGO. While a standard NGO has to be constantly supplied with funds, a social company tries to secure a return on an initial investment in order to offer its services in the long term. Harish Hande is convinced that it is possible to satisfy the electricity needs of people who lack it and at the same time remain a profitable company.

             Gandhi

In India, 57% of the population have no access to electricity, especially in rural areas. These people, excluded from the distribution network, are poor and have to pay more than well-off city dwellers to have electric light. For example, for a street peddler or a villager’s family, the use of a simple oil lamp (which pollutes) costs 40 rupees (€0.60) per day for fuel, while a middle class family in Bangalore pays about 20 rupees (€0.30) per day for its electricity bill, all inclusive.

Harish Hande naturally turned to solar energy, a clean energy particularly adapted to a rural environment in a tropical country. The start of the company was difficult: for the first five years, Selco only sold 500 installations. Rather than slashing prices by diminishing the quality, Harish Hande continued to give real long term solutions to his customers. This is another aspect of the shift in priorities in comparison with a standard company: the search for customer satisfaction is an aim in itself, and not a simple question of image. He set up an after-sales service, and all the Selco installations have a 5-year guarantee.

A solar installation needs a substantial investment, but in the long term, the electricity produced is free. In order to allow its poor customers to access this technology, Selco formed some partnerships with financial institutions that let the customers finance their credit investment. Selco is not a manufacturer of solar equipment, but it deals with different suppliers selected for the quality of their stock. The role of the company is to listen to the specific needs of the customer and evaluate his ability to reimburse. This type of company gives him greater freedom to offer each customer an answer adapted to each case: technical installation and method of financing.

The job is carried out by small experienced teams scattered in the large Indian state of Karnataka. They are particularly motivated by their ‘mission’. ‘Mission’ was the word used by Sarah Alexander, one of the managers of the company. When she detailed the activities of Selco, her eyes twinkled. Visibly, working for a social company gives a different perspective of work, and she told us that her motivation could not be compared with what she experienced in her former jobs.
              Sarah Alexander

The efficiency of a social company is not measured by the amount of profit, but by its ability to fulfill a ‘social’ objective: for Selco, to provide a maximum of houses with quality installations. Harish Hande makes a point of choosing investors who share the same vision. At the moment, all the shareholders of Selco are non-for-profit organisations who find Harish Hande’s approach cheaper and more efficient than direct assistance to the target population.

And it works! Statistically, Selco customers with low income reimburse their lenders more often than well-off people do. They realise the real contribution that electricity gives them: most times, a simple lamp helps these people earn more money as it allows them to work after sunset. Once a family has been canvassed by the Selco teams, the rest of the village usually asks progressively to be equipped thanks to word of mouth, which is the best publicity.

             A solar lamppost Selco Solar

Today, Selco has 140 contributors and continues to grow. Since its foundation in 1995, the company has sold more than 100,000 solar installations.

Originally only based in the state of Karnataka, Selco is trying to break into the state of Gujarat with the help of SEWA. SEWA is a syndicate of independent women whose cooperative bank will serve as financial partner in this state. The company plans to extend its activities in other Indian states, depending on the financial partnerships that are concluded locally.

Harish Hande wishes to extend his company model to other technologies. Selco is looking for simple and cheap answers in order to allow its customers to improve their day-to-day lives while respecting their environment. Recently, the company formed a partnership with an innovative wood-burning stoves supplier. The stoves retain the maximum of the heat produced by the combustion. Customers need less wood to cook, and it is better for the forest. It is the same for solar energy. Selco is partner to an environmentally friendly technology supplier and to a financial institution in order to give the most appropriate answer to each customer.

Contacts

Website : www.selco-india.com


François
(Translation: Yolene Dabreteau)