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Himalayan Rocket Stove Update – NOV 2019

It’s been a while, so there is a lot of ground to cover and I’ll stick to the highlights, as there are plenty of those.

Since moving to Parwanoo earlier in the year, we have focussed on getting our production systems in place to deal with the expected increase in demand. We now have 3 major manufacturers making Eco Rocket Stoves, and several minor suppliers who make accessories for us, like stainless steel hot water systems. There have been quality issues from 2 of our suppliers, so that has been a key issue to resolve as we move into a more streamlined and high turnover production cycle, but we are getting on top of these through a combination of increased team size, meaning we have staff on site for checking, as well as improved systems of tracking and communicating these issues.

Sales

But that’s getting ahead of myself. Here’s some numbers to bring us up to date. We have just assembled unit #2000 (we number all the units) and our sales last month (October) were over $100,000 AUD. We grew the fulltime permanent team from 7 to 15 in the last few months, and managed to maintain our team culture in the process. (That’s important, as we are a tight knit group with a highly supportive and friendly environment. All our new employees fit with our keen sense of social impact focus and an understanding of Himalayan cultures).

New Markets

We have been working hard to get our first truckload of stock into Nepal (its harder than one might think it should be) and that will be arriving in Kathmandu this week, after many delays along the way. There are a lot of people keenly awaiting this delivery so it will be satisfying to finally get it to them.

Next week we are sending a small team (Tanzin and Ajay) to the NE and Bhutan for a round of meetings with various parties who are highly motivated to get our products into these regions. These include an internationally funded foundation overseeing 130 villages looking for a heating solution, and an educational facility which purchased the full range of stoves from us for review prior to this meeting.

Jammu and Kashmir has had a political reshuffle, and now the region that was called Ladakh is now a formal entity with its own UT (Union Territory) status and the rest of J&K is a separate UT. This is relevant as we have been selling very well in Ladakh, but have not been able to deliver to the Kashmir region due to political instability. We are hoping this new situation will allow us to deliver to J&K as we have many requests.

Our own stores still include Manali and Leh, and we have opened a new store in Kargil (now part of the new Ladakh UT). Distribution outlets include the Shimla region, Uttrakhand, Sikkim / Darjeeling, Udampur in J&K, Rampur in Kinnaur Valley and more on the way.

Awards / Grants / Mentions

As mentioned in an earlier update, we were a winner of the ASME ISHOW award in Bangalore in April (along with 2 other teams from India, 3 teams from Africa and 3 teams from North America). All the teams were invited (and funded) to attend an ISHOW Bootcamp in New York City last month, so Chetana and I went as representatives of HRS.

The Bootcamp was a great chance to get top level feedback on many aspects of the company and product, and we are in the running for further investment / grant funding from them (to be announced in December). We also presented at another event called Impact-Engineered, with a focus on mechanical solutions to social impact issues. Out of all the teams, we are one of the only teams in full production, as the rest are generally in prototype phase.

Simultaneously, while we were in NYC, HRS was on the shortlist to pitch the project to Social Alpha, a social impact funding group funded by Tata Trust. Abhishek and Chozang went to Delhi to represent HRS and to demonstrate the Eco1 Rocket Stove to a high-level review panel. Waiting to hear back about that.

www.socialalpha.org

And if that wasn’t enough, we have also been selected for coaching by PFAN, a UN based body that funds social impact projects in developing demographics around the world.

www.PFAN.net

What have we learnt?

One of the key take-aways from the ASME Bootcamp was understanding more fully the limitation of our seasonal funding cycle, where we have good sales through the winter, almost none in the summer when we need to produce more stock, a 3x growth trajectory and the need for ever increasing production funds to cover the scaling of a manufacturing enterprise.

It was not news to realise this was a key challenge for us… but it was somewhat novel to realise (in conversation with Kumakshi Rao from Ankur Capital) that social impact investors will tend to shy away from this kind of scenario as they (rightly) perceive the unsustainability of this.

In simple terms, no amount of investment will cover our growth rate indefinitely (we borrowed $200,000 AUD for production funds this year, and will need about $500K next year and $1.5M the year after and so on, given the current rate of growth and the same seasonality of sales.)

The solution (it would appear) is not to keep borrowing indefinitely, or even to seek investment (although we are still open to the right kind of investment), but to smooth out the seasonality with one or more of these solutions:

  1. Develop a successful non-seasonal product range
  2. Open up a Summer Market for our existing products
  3. Reduce our growth rate to a sustainable level that we can self-fund (possibly 2x year on year)

Option A: Non-Seasonal Products

To achieve goal A is one of the reasons I set up Rocket Man Designs in Australia, as this will be the key focus while I’m back in Australia, is to work up new designs that we can take into production in India through HRS. I successfully raised funds for this venture earlier this year and this has enabled me to establish a new product development cycle which is now in action.

I recently had a successful meeting with one of our product manufacturers using the latest CNC laser technology running on AutoCAD. In a single design meeting, I was able to hand over a whole new design I had worked up in Sketchup, and they were able to get me a fully assembled prototype back within 2 days.

This level of high accuracy, rapid turn-around prototyping means I am now planning for a new model Rocket Stove (tentatively called the ‘Baby Rocket’) to be in production by December. This will be a smaller, lower cost home heater targeting the sector of our market that can’t afford the Eco1 Rocket Stove. It will also be the model that is most likely to gain subsidies from the government sector (talks currently in process).

All of this gives me the confidence to aim for our initial summer product range (institutional cooking stoves) to be market ready by March 2020, and then I’ll be clear to continue working on the waste incineration product line through the middle of 2020, aiming to have something ready for production by July. This is the big one, and there is an ever-growing demand for waste management solutions from individuals, institutions and various government departments, including the Pollution Control Board of Himachal Pradesh.

Option B: Summer Markets

During the recent trip to the USA with Chetana, we took a side trip to Colorado and had a quick look at the possibility of establishing a distribution relationship in Boulder, a funky town on the edge of the Rocky Mountains with a seemingly suitable mix of characteristics that could be compatible with our range.

Even though North America has the same winter season as the Himalayas, the reasons and timings for purchase are likely to be less urgently seasonal as they are here in India.

Australia, NZ and South America are also future options for summer markets and I will continue to consider these as we move forward. The main barrier to entry has been certification requirements, but we may have found a way around this in the US, by targeting the camping and ‘prepper’ markets.

Option C: Scale more sustainably

This might seem to be the obvious solution and we could slow down our growth to one which we can afford to sustain through our natural cash flows. However, considering the positive impact potential of getting more stoves into the field, I am inclined towards scaling as fast as the market will absorb what we have to offer.

If we continue a steady 3x growth year on year, then we are on track to save over 1 million mature Himalayan trees in less than 10 years.

Management and Team Development

All of the above means I am quite busy, but personally very satisfied with the progress of the Himalayan Rocket Stove venture. The past few years have been comprised of 2-3 trips to India of about 2 months each, during which I oversee company expansion, new products, team development, and general trouble shooting.

I am trying to step back from a hands-on Managing Director role to an (optimistically) slightly less hands-on CEO role in the company. My personal ambition is to eventually designate myself as Product Designer, and to leave the running of the company to the core team.

To transition towards this, I recently set up a Management Team (comprised of me and 3 of the senior staff: Nitisha, Ajay and Abhishek) who consult with me on key issues on a weekly basis, and who coordinate with each other daily. We are in transition, but so far this seems to have potential. This also aligns with our corporate philosophy of having a generally flat or ‘pimple’ hierarchy, where everyone in the team can talk directly with anyone else. We have reporting structures for primary relationships, but overall the cross departmental flow of communication is a major strength which I am actively supporting.

One of my key goals this trip (other than product development) is to establish systems that support our growth as a company. This is going well, although we just had a glitch in our process of transitioning to an online accounting package (Quickbooks) when we found it doesn’t deal with multiple GST codes (which we need due to having branches in various states of India). We are now exploring Reach Accounting, but let me know if you have any recommendations for software that can deal with the complexity of Indian GST!

And… to wrap it up

Overall, we are in the best position we have ever been in as a company, on every measure. We have stock in hand, smooth production flow, funds in the bank, a great team, markets keen for our products, happy customers who are constantly referring new customers to us, an almost negligible spend on marketing budget as a result, and most significantly… we have consistently positive results in terms of wood fuel reduction, smoke reduction and quality of warmth in homes across the Himalayas.

We are working to open the market for waste biomass pellets and recently sourced and sold over 1.5 tons of pine needle pellets to a single customer who will use them in a resort in Ladakh with several of our Eco Rocket Stoves adapted for pellets.

This directly leads to a spectacular net result of positive impact on forest resources, reduction of CO2 and smoke emissions, and supports a general transition away from cutting forests for heating homes. More pelletising operations are needed in the Himalayas, as we have effectively bought up all the available stock of pine needle pellets so far.

If you made it this far, thanks for reading, and thanks for your support in whatever form that may have taken, including positive wishes for the project to succeed.

It’s been a long process, but I can see the day rapidly approaching where HRS becomes a self-sustaining entity that contributes to a better planet with more trees, less smoke and warm cosy living rooms where people connect in the real through the long cold winters, nurturing communities working on local solutions for ecological issues.

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