Mr. Mukundan had a dream. He wanted to start a company that could make a difference to the rural society. Having been in Small Scale Operations, Mr. Mukundan had a good feel of the rural products and felt a lot can be done if good quality innovations can be taken to the market.

Mr. Mukundan company Servals Automation Private Limited (SAPL) is based in Chennai in Tamil Nadu. Mr. Mukundan was very impressed with a stove burner developed by Tyagrajan, a small time innovator, and was trying to promote him. Mr. Mukundan was also trying to forge links with Rural Innovation Network (RIN) to promote rural innovators.

The Business:

The idea was to use Servals Automation as a launch company for rural innovations, and Mr. Mukundan felt very comfortable with the idea of having two products in his portfolio, both with rural market as the target and with comfortable support from Rural Innovation Network. He needed monetary support, which could help him realize his dreams. Lack of collateral meant loan was not forthcoming and absence of adequate finances, his company was not able to move forward to build the business.

The Products

The stove burner was designed to save 27% of kerosene compared to the burner in the markets. This would not only help poor people save money on fuel, but would save the country lot of foreign exchange. CISO (a Govt. Enterprise) and Anna University testified the claims of the innovators. The trial run in the market had favorable response despite slightly higher cost of the product.

Rain gun, designed by Anna sahib, a farmer from Karnataka, is an effective irrigation tool, reduces the need for flood irrigation, uses water more scientifically, is almost half the price of the imported guns. A large irrigation company EPC irritation tested the rain gun and its performance was found to be good.

AIMVCF and SERVALS

AIMVCF found SERVALS with these product portfolios a good investment option. The investment by Aavishkaar would enable SERVALS to strengthen its assembling, marketing and distribution channel and promote the products.

Aavishkaar carried out an in depth due diligence to find out the market potential for the products. It also studied competition in detail. The market potential was large potentially and hence the success would depend on how good the penetration strategies are executed. Both the products got good market reviews during the test market phase.

Strategy for SERVALS

SERVALS had in place a clear market strategy. It had tied up with Rural Innovation Network on a commission basis to use RIN knowledge of product and innovator to its advantage. A detail distribution channel was worked out and innovative means of distribution was planned. A back up strategy in case of failure of any channel was in place and the targets were kept very realistic and conservative.

Relationship with Innovator and the Company

Precondition for the investment by Aavishkaar included drafting of a clear and precise agreement between SERVALS and the Innovators. The two agreements were drafted and the two innovators gave their consent on all terms before signing them.

Investment

AIMVCF decided to invest 8.1 Lakhs into SERVALS and took 49% of the stake in the company after completing its due diligence. The promoters hold the remaining.

AIMVCF Role after Investment

Aavishkaar has rights to a single nomination to the board of Servals Automation Pvt Ltd. The reporting structure for SAPL has been designed in such a manner that the executive team of AIMVCF continues to enjoy insights into operational issues. Regular meetings with the CEO of SAPL, joint reviews of performances with all stakeholders, visits to production site and markets fine-tuning of strategies are regularly done.

Exit

AIMVCF intends to exit from SAPL at the end of 5 years. In order to look at a bullet one time exit, AIMVCF is looking to a steady flow of dividends from the company once it breaks even.