Oorja Stove

Submitted By-

Yogesh Tiwari
Roll No.- 37

"Oorja" Stove taking off in India Oorja today represents a new way of cooking and has the potential to grow into a large, successful business in India and globally. The initiative aims at creating a commercially sustainable business, offering clean, safe and affordable energy solutions to identified customers in both urban and rural households in developing countries." A confluence of innovations An estimated 70 million people in India use wood and coal fires for cooking. Thats four times the population of Mumbaiand a fourth of the US. Thats also the size of the potential market for Oorja, a biomass stove designed in the laboratories of the Indian Institute of Science, Bangalore. We offered to collaborate with the scientists who had spearheaded its development, and take it to the masses, says Mahesh Yagnaraj, CEO, First Energy. It took a year to evolve the prototype into a commercial product, called Oorja Stove. The scientists also invented a special fuel for the stovepriced at Rs 8 per kgand a commercial version of the stove, aimed at restaurants and caterers. Having sold 4.5 lakh pieces, the teams now hoping to reach a million households by 2011.

Head count The stove The fuel: bio-mass pellets from a mush of corn cobs, coffee beans and sugar cane crush. The distribution network: 3,000 women trained to sell these products. Shades of green Oorja Plus: Rs 1,350; accounts for 50 percent of sales Oorja Super: Rs 1,650; high-end model with flame control The economy model: Rs 999 Jumbo caterer: Rs 9,000 Competitive scenario Domestic LPG: Rs 23 per kg Commercial LPG: Rs 60 per kg Wood / biomass: Rs 2 to Rs 4 per kg Calorific value standoff 3 kgs LPG = 7 kgs of Oorja pellets 4 kg wood = 1 kgs of Oorja pellets

The timing couldn't have been more perfect. With LPG prices set to skyrocket, here's how you can cut cooking fuel costs by at least 30 per cent. If you don't believe that, try this - a

biomass-based, energy-efficient and environment-friendly stove priced at Rs 1,200-1,500 and whose fuel pellets cost Rs 15-16 per kg. Marketed under the brand name Oorja, this innovative cooking solution is courtesy Punebased First Energy, whose stove has already created ripples in the lower-income category, replacing firewood and kerosene. According to the company, cooking a meal for a family of five with Oorja costs less than Rs 6.

The Opportunity Mahesh Yagnaraman and his partner Mukund Deogaonkar had not planned on becoming entrepreneurs. They simply responded to a need that presented itself during the economic slowdown in 2008-2009. They rejuvenated a company they had worked for, called BP Energy, once owned by British oil and gas major BP. When the economic crisis hit, BP wanted to exit the alternative energy space and set up First Energy to facilitate the process. Yagnaraman, who was CEO and Managing Director of BP Energy, took over as CEO of the new company along with Deogaonkar. The enterprising duo then collaborated with the Bangalore-based Indian Institute of Science (IISC) to develop the Oorja stove. Fresh Start "When we took over First Energy, we had some serious cost-cutting to consider, and as recessionary pressures began to increase, it was tough to convince investors. Nobody wanted to back innovation in difficult times," recalls Yagnaraman, an MBA from XLRI Jamshedpur and who has worked across Strategy, Sales, Marketing, Supply Chain and IT implementations with Unilever, Castrol and BP. Finally, Yagnaraman and Deogaonkar pooled their own resources along with Pune-based consultants Alchemists Ark and First Energy resumed operations in 2009 with a capital of Rs 2 crore. Former colleagues of BP, who had worked with Yagnaraman and Deogaonkar, were now with Alchemists Ark, and they believed in the grit of these two bravehearts. Besides, there was a huge void to fill, as far as alternative energy sources in India were concerned. But it wasn't easy. "From a staff of 35-40, we scaled down to around 8 to 10 and moved from Mumbai to Pune to save costs. In fact, we initially had to share office space with Alchemists Ark. We also had to scale up quickly, to stay afloat," says Yagnaraman.

Second Innings After making a mark in the rural and semi-urban markets, First Energy trained its sights firmly on the commercial segment and found opportunities galore. "The HoReCa (Hotel,

Restaurants and Catering) segment has grown by leaps and bounds in the last decade because eating out has become a habit since people are out working all day and there's no one home to cook. Enter hotels, restaurants and catering outfits that serve packed meals."

Hotels and other commercial establishments were receptive to First Energy because the company did not suggest replacing conventional cooking stoves with the Oorja stove. Instead, it pointed out that using one or two Oorja stoves would cut energy consumption by a third. With no subsidies for LPG, the prospect was irresistible! The company now caters to the needs of 2,500 commercial establishments, including some big names in this sector, in Hyderabad, Bangalore and Chennai. Mumbai is the latest feather in its cap and Kolkata is on the anvil. "Our vision is two-fold," explains Yagnaraman. "First, we want to reclaim the domestic opportunity, as and when the subsidy environment in India changes. Second, we aim to become an essential partner in commercial kitchens by providing a cleaner, more economical source of energy."

Road Ahead If the economic crisis of 2008-2009 provided First Energy its first breakthrough, another looming crisis might offer the company its second big break - the prospect of the government withdrawing the subsidy on LPG, which will hit consumers below the belt. "When this happens, we will be prepared to reclaim the domestic segment," says a confident Yagnaraman. Also on the cards are plans are taking their footprint overseas, to countries such as Sri Lanka, Bangladesh, Indonesia, Vietnam and even some Latin American and African nations. "The idea is to grab the opportunity in countries that are moving from a very traditional form of cooking with conventional fuels to new-age, alternative fuels," Yagnaraman points out. The company's revenues are pegged at around Rs 15 crore now but First Energy plans to reach the Rs 100-crore mark in a couple of years. And why not? Serendipity seems to favour Yagnaraman, who has never failed to seize an opportunity. First Energy is also listed among the top 25 Technology Pioneers of 2012 by the World Economic Forum, a vote of confidence that the humble Oorja stove has the potential to shape the future.