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Promethean Power Systems

Man pours milk from the small canister into a larger canister within a processing facility.

Powering dairy farmers in rural India

  • Case Study
  • Energy
  • India
  • 2019
reported an increase in income after selling milk to Promethean
tons of CO2 mitigated in 2022

Promethean provides cooling solutions for the dairy and foods industry. The company’s core product makes it possible to install and operate village level milk chilling centers, replacing the need for a backup diesel generator.

The problem

Farmers in rural villages in India face challenges in reaching fair formal markets without access to reliable cold storage, which requires a diesel generator where power is unreliable. Further, dairy companies are unable to source high-quality milk consistently and efficiently without implementing cold storage near the farm gate. When refrigeration fails, milk goes bad. While India is the largest producer of milk and second largest producer of fruits and vegetables, up to 25-30% of the produce is degraded due to lack of accessible cold storage solutions. This amounts to nearly $14 billion in lost revenues for farmers and producers. 

A major obstacle in setting up a proper cold-chain is the lack of reliable grid electricity to run refrigeration systems in remote farming areas. In such conditions, diesel generators are required as backup, leading to unsustainable operating costs. For example, milk is produced by millions of small farmers in villages scattered across rural India. If dairy farmers can chill raw milk at the source, they can eliminate spoilage, produce higher value products, reduce transportation costs, and reach greater markets.

A study by the National Centre for Cold-Chain Development (NCCD) shows that in order to effectively connect the farm to the end-consumer, chilling centers, warehouses, and transport need to be accessible at the village level. A cold chain solution closer to the farm gate is key to securing the estimated losses of around 20% that occur at the field and assembly level, which has a cascading effect on the shelf life of perishables later in the value chain. A solution like this can create value for all stakeholders from farmers, to traders and processors to the end consumer, both in terms of price and quality.

But unreliable power supply in rural and semi-urban regions of India makes it challenging to set up cost-effective chilling centers at the village level. Aside from just milk collection, village-level chilling and storage is expensive due to the need to run diesel-operated generators.

The solution

Promethean Power Systems’ patented thermal battery enables dairy companies and dairy farmers to install and operate remote refrigeration systems without the need for a diesel generator, thus making it economically viable to chill milk at the source. 

Prior to Acumen’s funding, Promethean primarily utilized a B2B business model, selling to large enterprise dairy companies. Promethean’s service-based business model offered its systems on a per-month or per-usage fee basis. With no upfront cost for the dairy company, Promethean was able to expand its customer base. 

With Acumen’s funding, the company expanded its service-based business model and developed next generation products, including a small capacity “micro” milk chiller, micro cold storage, and refrigerated transport. The company also developed digital tools to complement their offerings including remote monitoring, IoT, service management, and mobile phone-based milk collection systems. Subsequently, Promethean successfully raised multiple debt facilities to build their service model team and expand its service model from lenders in India including Caspian, Unitus, Samunnati, and Grameen.

Over time, Promethean has evolved its business model to cater to the changing needs of its customers. With the rural hub model, Promethean sets up hubs in villages with micro milk chillers that are operated by women entrepreneurs or Village Level Entrepreneurs (VLEs). For a commission, VLEs collect and chill the milk, which Promethean supplies to dairy companies as a service. VLEs also get an opportunity to earn additional commission by selling dairy nutrition, inputs, veterinary services, and extension support for farmers accessing the hubs. The deployment of the rural hub model improves and strengthens access to markets and services for underserved and over-looked dairy farmers by establishing village level rural refrigeration hubs equipped with micro milk chillers. 
The model is built on three pillars: affordable digital milk testing equipment to enable transparency and data-driven decision making; direct electronic payments to farmers; and formal linkages to dairy processors who purchase quality assured milk from Promethean’s network. Beyond transactions, the rural hubs will serve as research centers for future product innovation.

“I was thinking of constructing my house for a long time and that became possible this time due to increased business in dairy and from agriculture also.”

Women micro-entrepreneur of Promethean

The origin

The founders, Sorin Grama and Sam White, started the company in 2007 with a vision to empower rural communities and reduce milk and food wastage with clean energy solutions to increase farmer income.

The impact

romethean improves the livelihoods of farmers by providing efficient and eco-friendly cold chain solutions, while also enabling the farmers to gain access to organized markets. Farmers can sell milk directly to dairy companies with sound milk quality assessment, price determination, and payment practices. Farmers often sell the milk to village level aggregators who supply milk to a nearby processing plant. Farmers are susceptible to unfair milk sourcing and payment practices. Having gained access to an organized dairy chain, farmers receive a price based on solids-not-fat (SNF) and fat content in the milk, and money is credited to their account electronically every week. 

Currently, over 130,000 farmers sell milk to Promethean, and on average, 40-50 farmers benefit from every unit installed.

As a result of getting access to the processing center, average milk sourced in the villages increases within 12 months. This is because farmers start to sell all the milk produced to one center, and the enhanced confidence in having secure access to markets makes the farmers invest in rearing more animals for milk production. On average, milk production in a village increases by 30-40% post setting up a milk sourcing center. This also implies enhanced income levels and improved quality of life for the farmers. As per a 2021 60 Decibels study, 35% of the farmers reported an increase in earnings after starting to sell to the collection centers and 43% reported at least some improvement in quality of life.

The rural hub model has the potential to scale up to tens of thousands of villages if the right process, business model, partners, and appropriately suited financial capital can be combined. If this model can be successfully expanded, the potential for scale and impact is significant and would be timely to help smallholder farmers gain food and income security and improve the overall sustainability of the dairy supply chain in India.

The investment

In 2019, Acumen invested $1 million preferred equity in Promethean Power Systems Inc. The investment funded the initial capex to drive the subscription model and to build a team of services and technology professionals. Promethean expanded its customer base through its sales model, but did not see significant expansion in its lease units. Since then, Promethean has pivoted its model.

Since our last investment, Promethean has added new products and developed its rural hubs business model. An additional round of $500,000 was raised in 2022 to enhance and expand the rural hub model, which is expected to lead growth in the coming years. The funding will help Promethean propel to its next stage of growth. 

Acumen also provided three technical assistance grants to expand the rural hubs, establish farmer producer organization (FPO) networks through an NGO partner, SSP, and help build capacity of the village level entrepreneurs managing the hubs. This model brings ecosystem players onto Promethean’s hubs, leading to more areas of revenue generation and enhancing sustainability of the company. Acumen continues to support in this journey helping the company navigate the many hurdles.

The story

Back in 2007, Promethean launched with a vision to reduce wastage of milk in the sourcing value chain and increase farmer incomes. At the time of Acumen’s previous investment in early 2019, Promethean wanted to grow its “pay by use” leasing business model. The model featured a leasing period of five years where customers would sign up for a minimum guaranteed volume per day and an agreed fixed rate per liter of milk collected. 

However, due to the impact of COVID-19, Promethean decided to slow down its leasing business. This was on the backdrop of uncertainty and drop in demand from the hospitality sector. The leasing model also faced additional challenges from its customers. Dairy customers typically wanted to own the asset after 3-5 years, instead of a longer term pay-per-liter model. This limited the potential for long term recurring revenues for the company and required them to raise debt for the initial capital expenditure. 

“I did not have to be at the mercy of the milkman where he says, ‘ok today I will pay you Rs.500’ and then for the other installment, I will again have to beg. At Laxmi Dairy, money is paid on time.”

Women micro-entrepreneur of Promethean

The company observed a greater need and opportunity to expand its chilling services for farmer communities in rural villages where traditional dairies typically do not operate. While the leasing model was profitable (and still forms 18% of the company’s revenues as of FY22), there was a greater opportunity for scale and impact in the rural hub model. Today, not only does Promethean sell and lease milk chilling solutions and provide customized cold storage solutions, but it also sets up hubs in villages with micro milk chillers that will be run by women entrepreneurs or Village Level Entrepreneurs (VLEs). 

Promethean’s rural hub model provides these farmers with stronger market access, fair pricing and transparency, access to education and training on proper animal care, and access to inputs and veterinary care. Farmers can also access financial services, including microloans, cattle loans, and insurance. As these farmers are paid directly in a fair and transparent manner for their milk quality and quantity on a daily basis, they are incentivized to further improve and expand their dairy farming. With these additional services, farmers can potentially see their incomes increase by 1.5-2x. To date, Promethean has facilitated over 300 cattle loans, for INR 50,000 each, and 30 microloans for INR 5-10,000 each. 

The company is empowering women Village Level Entrepreneurs (VLE), Self Help Groups (SHG), and Farmer Producer Organizations (FPO) to build a cooperative-based model that reduces the financial liability of entrepreneurs, strengthens community buy-in, and increases community ownership. In India, where women own only 20-30% of all household wealth, community-owned assets can create a deep impact in these women’s lives.