Sustainable transformation - KPMG · PDF filecompetitiveness report 2009-2010, ENAM securities, Return of the Urbanite, January 22, 2010. Source: ... Sustainable transformation is

Sustainable transformation:

The new India

PanIIT Conclave 2010

kpmg.com/in

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The two key parameters are ‘sustainable development’ and ‘transformation’.

• Sustainable Development policies broadly encompass economic, environment, and social. Economic development, social development, and environmental protection are the three ‘interdependent and mutually reinforcing pillars’ that can ensure sustainable development.

Background

“The achievement of sustainable development requires the integration of its economic, environmental and social components at all levels. This is facilitated by continuous dialogue and action in global partnership, focusing on key sustainable development issues.”

UN Department of Social and Economic Affairs (Division for Sustainable

Development).

Unprecedented growth (2000-2014 E)

The debate on India’s growth story and its sustainability is far from over. Having displayed strong resilience (relative to global economies) during the recession, India is now reported to be heading for economic recovery. Principally driven by high levels of investment and growing domestic demand, India posted a growth of 6.7 percent in 2009-2010 in contrast to 2.75 percent for Asia during the same period.

GDP growth in India is further forecast to gain momentum this year (2010-2011)

and touch 7.3 percent as compared to 2.9 percent globally (for the period), making India one of the fastest growing economies2. The economic growth is accompanied with its set of perquisites as well as challenges. The question that needs to be debated is whether this growth is able to ensure sustainable economic development and accordingly transform India from a third world nation into a modern economy.

0

500

1000

200

150

100

0

1500

2500

2000 2003 2006 2012(E) 2014(E)2009(E)

GDP Deflator

GDP at current prices

US

D B

illio

n

Index

2000

50

Source: Economic survey 2009-2010, The world economic forum, The global competitiveness report 2009-2010, ENAM securities, Return of the Urbanite, January 22, 2010.

Source: Wachovia Economics Group, Data as on 11 March 2009

A Comparative Summary

% 2008 2009E 2010E

Global 3.4 -1 2.9

India 9 6.7 7.3

US 1.1 -3.3 1.2

Eurozone 0.7 -3.3 1.2

UK 0.7 -3.4 1

Japan -0.7 -6.8 -0.2

China 9.1 6.5 8.2

1 The Times of India, India, China Leading World Recovery, November 14, 20092 Economic Intelligence Unit and Business Standard, GDP at 7.9% Beats Market Expectation, December 01, 2009

© 2010 KPMG, an Indian Partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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• Transformation in the way success is measured. The focus now needs to expand from top and bottom lines to triple bottom line wherein people, profi ts and environment stand on equal footing. Success of one does not come at the cost of other.

- Business Transformation: Achieving topline growth through identifying newer markets, novel product offerings, better customer delivery models, exploring

diversifi cation opportunities and initiatives that can help transform both companies and its customers

- Functional Transformation: Strengthening bottom lines through introducing effi cient processes, greater automation, employing cleaner technologies, skill development, knowledge management, productivity enhancement, restructuring of products and processes to help ensure maximum effi ciency.

Sustainable transformation is achievable when all the stakeholders participate in the setting the goals which are realistic, achievable, measurable and time-bound, collectively take responsibility of realizing the targets and reap the benefi ts of their accomplishments.

The ball has started rolling and India has begun the process of transforming its economy from a sheer economic growth center to a holistic economy.

There exists strong inter-linkages between the three domains; economic growth and distribution of wealth tend to infl uence both social and ecological attributes; while any change in social behaviour has its implication on economic development and environment. A development path that is “sustainable” should take into consideration institutions that will be conducive for greater participation of stakeholders at various levels.

Source: From Economic Growth to Sustainable Development, Feb 2009, Working Paper by Nilanjan Ghosh, Takshashila Academia of Economic Research Limited


Developing soft infrastructure education

EducationEducation is the key intervention for bringing change in knowledge, values, behaviour and lifestyles and is required to achieve sustainability and stability. There is a need to bring about shifts in thinking, values and actions of individuals and institutions in order to make concern for sustainability a central theme in all education. India needs to build and strengthen its educational infrastructure in order to ensure that it is able to meet existing and emerging skill demands. Currently India lags behind in terms of employability of its human resources- amongst the age group of 15-29 years, only about 2 percent are reported to have received formal vocational training and another 8 percent received non-formal vocational training. This is a dismal number when compared to corresponding fi gures for industrialized countries which vary between 60 to 96 percent3. The sector is attracting signifi cant investments along with government working towards bringing a paradigm shift in the existing infrastructure.

Private sector participation: India’s INR 1,731.6 billion (2008) worth private education market has been projected to touch INR 4,978.35 billion by 20184. There is a huge opportunity for private players in three segments – schooling, higher education and vocational training. Private participation is expected to create thought leadership and centers of excellence in the country, which will help in policy development.

Capacity building

Developing good quality infrastructure is the main component for sustainable development. India needs to ensure the availability of the necessary hard and soft infrastructure that will help it lead to sustainable transformation.

Schooling

Main Segment 2008 (INR Bn) 2018 (INR Bn) CAGR

Pre School 51.95 251.08 17%

K-12 909.09 1,870.13 7%

Tutorial 216.45 510.82 9%

Books 73.59 129.87 6%

Stationary 59.74 112.55 7%

Education CD-ROMs 5.19 47.62 25%

Multimedia in School 1.08 142.86 63%

TOTAL 1,317.10 3,064.93

3 Eleventh Five Year Plan document4 1 USD = INR 43.29 (average of 2008)

Source: Market Sources and Technopak AnalysisNote: 1 USD = INR 43.29 (average of 2008)


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Higher education


Higher Education 290.04 783.55 10%

Preparatory 69.26 255.41 14%

TOTAL 359.31 1,038.96

Vocational education and skill development


Child Skill enhancement 32.03 242.42 22%

IT Training 8.44 203.46 37%

E-learning 1.95 47.62 38%

Finishing School 1.08 77.92 53%

Vocational 64.94 268.40 15%

Teacher training 0.65 47.62 54%

TOTAL 109.09 887.45

5 Venture Intelligence




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The education sector offers great potential, in view of the enormous demand from consumers, and this is seen by the participation from private equity and venture capital fi rms. There have been over 45 deals worth INR 17,723.75 million in education-related companies over the years5.

Government interventionThe government is aggressively increasing its expenditure to improve higher education infrastructure. It also plans to follow the public-private participation (PPP) route to meet funding requirements worth INR 2.2 trillion. The central governments

expenditure on education has been increasing, from 2004-05 to 2008-09 the expense has increased at a CAGR of nearly 30 percent.

Private equity interest in Indian healthcare sector spreads across segments. There have been investments in 193 deals worth more than INR 130.20 billion. Diagnostic Services, Medical Equipment, Wellness Products and Services and CROs are attracting heavy investments. Other areas include specialized chains in areas like diabetes, orthopedics, optics, geriatrics and psychiatric.

Healthcare According to the Rio Declaration on Environment and Development, “human beings are at the centre of concerns for sustainable development, and that they are entitled to a healthy and productive life, in harmony with nature.” The goals of sustainable transformation can only be achieved in the absence of a high prevalence of debilitating diseases. Accordingly, there is an urgent need to address the causes of ill health, including environmental causes, and their impact on development, with particular emphasis on women and children, as well as vulnerable groups of society, such as people with disabilities, elderly persons and indigenous people.

India’s existing physical healthcare infrastructure is inadequate to meet the current healthcare demands. Around INR 662.92 billion is expected to be spent on healthcare infrastructure by 20136. Healthcare infrastructure mainly comprises of buildings, equipments, ambulances, etc. This growth is driven by the rising income levels, changing demographics and illness profi les with a change from chronic to lifestyle diseases.

Healthcare spending

Breakup of PE investments

2008

1,775

3,636

7,273

14,675

2013P 2018P 2023P

INR

Bill

ion

CAGR 15%

Wellnes 1%

Pharmaceuticals 37%

Other 7%

Medical Devices 4% Hospital 26%

Diagnostics 5%

CRO 9%

Biotech 11%

Source: Technopak

Source: Venture Intelligence PE deal database

Healthcare spending

(% of GDP) 2009e 2014f

Brazil 8.4 8.6

Russia 69.26 255.41

India 5.0 5.0

China 4.7 4.7

Germany 10.6 10.6

US 16.3 16.2

Japan 7.0 7.9

Source: EIU


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6 Global infrastructure: Trend monitor Indian helthcare, KPMG

Government initiativesThe Government has taken an initiative to institutionalize public-private partnerships (PPP) in healthcare. They are in process of developing guidelines for PPP. Defi ning the framework and sustaining the partnership will be the major role of the public sector.

The government plans to set up venture capital funds worth INR 29.84 billion7 to enhance drug discovery and reinforce the pharma infrastructure in the country. ‘Pharma Vision 2020’ has been prepared by the Department of Pharmaceuticals for making India a leading destination for end-to-end drug discovery and innovation. For this it has been provided with the necessary support in the form of world class infrastructure, internationally competitive scientifi c manpower for pharma research and development (R&D), and venture fund for research in the public and private domain.

7 1USD = INR 46.66


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Developing hard infrastructure

The inclusive economic growth agenda calls on India to invest in infrastructure to achieve high sustainable economic progress, connect poor people to markets, and increase the access of these poor people to basic productive assets. Accordingly, an estimated INR 21.64 trillion investments is required to sustain growth8. The Infrastructure sector has witnessed an increased participation by private players. The total investment by private equity players over the years amounted to INR 334.11 billion across more than 160 deals9.

Case Example: Jamshedpur (Alias Steel City, TataNagar or simply Tata)

One of the cleanest and greenest cities of India- Jamshedpur was declared as the 7th cleanest city of India for the year 2010 according to survey by the Government of India*. It is been predicted as the 84th fastest growing city in the world for the timeframe 2006-2020+.

A major part of the city is run by the Tata Steel itself and has resulted in one of the best civic amenities and urban infrastructure being offered to its citizens. Jamshedpur has also been selected as one of the cities for Global Compact Cities Pilot Programme by United Nations, the only one to be selected in India as well as the entire South-East Asia.

While building the city, Jamshedji Tata had said, “Be sure to lay wide streets planted with shady trees, every other of a quick growing variety. Be sure that there is plenty of space for lawns and gardens; reserve large areas for football, hockey and parks; earmark areas for Hindu temples, Mohammedan mosques and Christian churches.” What the city looks like today is a testament to his visionary plans.

Jamshedpur is the only city in India without a municipality. The responsibility for its conservation and maintenance is entirely assumed by Tata Steel, very likely a unique situation in the world.

Source: Wikipedia

* http://pib.nic.in/archive/others/2010/may/d2010051103.pdf

+ http://www.citymayors.com/statistics/urban_growth1.html

INR Billion

Sector Signifi cant development Government spending

Private spending

Electricity (incl. NCE) India is among the top fi ve electricity generating countries

The government plans to provide 100 percent rural electrifi cation, this in turn will provide opportunity to investors and developers in creating a sound Rural Electricity Infrastructure

4,810 1,855

Roads and Bridges Largest network of roads with length of 3.3 million kilometers comprising of national highways, state highways, major district roads, other district roads and village roads.

2,074 1,068

Telecommunications

The government plans to connect all revenue villages in India either through landline, mobile or WLL by February 2011 and proposes to provide broadband connectivity to all the panchayats in the country by 2012

808 1,777

Railways (incl. MRTS)Second largest in the world and have been fundamental in the industrial and economic development of the country.

2,115 504

Irrigation (incl. WD)

Investments in irrigation are expected to grow by 1.8 times during the next 5 years.

Road irrigation and urban infrastructure expected to drive future growth

2,533 -

Water supply and sanitation

There is signifi cant demand in the sector providing opportunity for private sector.

The water industry is expected to grow rapidly because of the emergence of the BOT model (build, operate and transfer) in municipal segment.

1,383 54


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Source: Planning Commission

8 Planning Commission9 Venture intelligence

This quote style is set in Univers 65 Bold 33pt on 36pt leading

INR Billion

Sector Signifi cant developmentGovernment

spendingPrivate

spending

Ports The port infrastructure has seen an increase in private participation due to the growing international trade and the growth of the Indian economy.

Private players are increasingly undertaking greenfi eld port projects.

76 159

Airports The top six airports in India account for 75 percent of the total air traffi c, while Delhi and Mumbai alone account for over 40 percent.

Private companies have also shown signifi cant interest in developing various Indian airports on the PPP basis.

27 50

Storage

Warehousing accounts for 20 percent of the logistic market.

The demand is very strong leading to large investments and expansion by logistic service providers and warehousing companies.

112 112

Gas

The increasing demand-supply gap has led the government to open up Exploration and Production to private participants through the New Exploration Licensing Policy (NELP) and to scout for opportunities in acquiring oil & gas assets across the world

103 65


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Source: Planning Commission

According to ADB’s latest report10 on the inclusive growth of nations, India is performing above-average on growth and social protection while doing reasonably well on building economic infrastructure. The country has been rated a score of 5.70 which is slightly above the middle point of the satisfactory range. The indicators encompass:

(i) growth, productive employment, and economic infrastructure

(ii) income poverty and equity (including gender)

(iii) human capability dimensions of inclusiveness

(iv) social protection dimensions of inclusiveness.

Inclusive growthIt has been observed that the pace and character of the transformation processes is not well-balanced across regions in India. There exist marked inequalities whereby certain regions are prospering economically while ensuring social well-being and effi cient utilization the sparse natural resources they have been endowed with, whereas others are experiencing deepening poverty, economic stagnation and destruction of ecology.

What this means for India is that despite Government’s commitment to ensure inclusive growth, the results are only mediocre and much needs to be accomplished to ensure a 360 degree transformation into new India. For India Inc this calls for a sustainable approach of doing business, wherein success is measured not only in terms of healthy bottom line, but also in terms of its performance in social and environmental areas. This requires development of innovative business models which enable rapid economic growth without compromising sustainability of ecology, fuel economic development and human well-being.

State-wise per capita net state domestic product (NSDP) at constant 1999-2000 Prices

30,000

Ch

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dig

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Po

nd

ich

err

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Hary

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a

Ke

rala

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Ind

ia

Man

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Jh

ark

han

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Assam

Utt

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Pra

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sh

Bih

ar

60,000

90,00077,801

58,755

41,89635,457 33,198

25,494

16,508 16,294 16,27212,481 10,206

INR

Source: Indiastat

Percentage of population below the poverty line

Bih

ar

Orissa

Sik

kim

Assam

Trip

ura

India

Guja

rat

Hary

ana

Him

ach

al P

radesh

Punja

b

Chandig

arh

40

30

5043

41

34 33 32

19

2 2 2 2 2

Perc

enta

ge

20

10

0

Source: Indiastat

10 Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress, June 2010


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11 Dynamics of Rural Transformation in Emerging Economies, April 2010 12 Dynamics of Rural Transformation in Emerging Economies, April 2010

Government’s Commitment for Inclusive Growth

Inclusive growth through poverty reduction and social development is the focus of India’s 11th Five-Year Plan 2007–2012. It aims to address several development challenges such as creating jobs, providing essential services to the poor, reinvigorating the rural economy, increasing manufacturing competitiveness, developing human resources, protecting the environment, and bridging the divides between regions, sectors, and genders. The Plan emphasizes the urgency of addressing the following key constraints:

(i) infrastructure bottlenecks and lack of long-term funds for infrastructure investment

(ii) the weak performance of agriculture and the urgent need to reinvigorate the overall rural economy

(iii) interstate disparities in terms of economic and social indicators

(iv) relatively poor education and health indicators despite the economic progress made over the past decade

(v) ensuring that growth is environmentally sustainable.

Rural Building Centers

A Scheme facilitating the setting up of a network of Rural Building Centres (RBCs) through the length and breadth of the rural areas has been launched by the Ministry of Rural Development with the primary objective of:

• Technology transfer and information dissemination

• Skill up gradation through training

• Production of cost-effective and environment-friendly material components.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

MGNREGA’s achievements to date include:

• Largest employment guarantee programme in the world

• Budgetary allocation has risen from INR 110 billion in 2006-2007 to INR 395 billion in 2010-2011

• Cumulative expenditure since the launch in 2006-2007 is INR 700 billion (as of September 2009)

• Nearly 41.5 percent of workers are women

• The fi nancial inclusion has enabled 80 million bank or post offi ce accounts to be opened, and

• 850,000 differently-abled persons registered as workers.

Source: Dynamics of Rural Transformation in Emerging Economies, April 2010

Rural transformation

Even after six decades of effort to support development and growth, the dimensions of poverty in India are staggering. India is ranked 134th in the Human Development Index (2009). This is demonstrated by the nutritional status of 46 percent of children under fi ve being underweight, compared to Brazil and China at 5 percent and 7 percent respectively, and high gender inequality, refl ected in the unacceptable sex ratio of 933 women per 100011.

Although Government policy has initiated steps to close the urban-rural divide through increased public investment, fi xing minimum support prices and decentralization of local government, the challenges still persist. India continues to struggle with low agricultural productivity -agriculture accounts for 19 percent of GDP employing 50 percent of the workforce and poor capital cum infrastructural investment in rural areas-less than 50 percent of rural households have access to basic infrastructure such as roads, power, and potable water12.

The need of the hour is collaboration between corporate, communities and government institutions to enhance farm productivity and the rural resource base. Businesses should commit to the national agenda of making the rural economy more socially inclusive.

If managed successfully the rural areas posses the potential to contribute by producing more and better quality food, creating more productive jobs that support better livelihoods, safeguarding culture and traditions, and looking after the vast natural resources.


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Natural resource management and environment friendliness13, 14,15

India’s rapid economic growth in the last several years has been accompanied by accelerated depletion of natural resources and rapid deterioration in environment quality.

India is not endowed with suffi cient natural capital in comparison to the population it supports. Though India is home to 16.7 percent of the world’s population, it only has 2.4 percent of the planet’s landmass, 4 percent of the fresh water resources and about a percent of the world’s forest16. India’s ecosystems are already highly degraded. Most Indian rivers have water quality unfi t for direct human use. Air quality in Indian cities is degrading despite signifi cant improvements in emissions from vehicles and industries. The country however continues to

The current situation of rapid economic growth without destroying the natural and ecological resources, challenges the very foundation of the style in which business is done today.

Case Study: Emergence of Rural BPO Industry in India

The BPO companies are evolving into knowledge-process outsourcing units, tackling specialized, high-end jobs while shifting low-margin, low-skill data entry projects to rural BPO centers.

There exists about 200 BPOs (mostly run by NGOs) in the country serving the rural purpose. The thrust of such rural BPOs revolve around servicing local clients and some even in vernacular languages.

With the Indian government expected to become the largest consumer of IT and BPO services driven primarily by National E-Governance Plan there exists huge opportunity for such rural BPOs .

Early Movers: Because voice work is still somewhat diffi cult for rural BPOs, many are experimenting with other kinds of services.

• SourcePilani is one of the few non-urban BPOs that do medical transcription work. The company also offers social media marketing services to social networks companies such as Facebook and Twitter

• DesiCrew has undertaken web site content creation and validation, GIS-based mapping and transcription work.

Source:http://trak.in/tags/business/2010/06/28/rural-india-bpo-sector/

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4450

13 Eco sensitive: Jairam has come at the right time for Congress, Times of India, 28 August 201014 Three factors that can derail India’s growth, Business Standard, 29 April 201015 http://www.sustainabledevelopment.in/Sustainable%20Development/indian_context.htm16 State of environment, India 2009, Ministry of environment and forests

Some Facts about State of India’s Environment

• About 45 percent of India’s land is degraded due to erosion, soil acidity, alkalinity and salinity, waterlogging and wind erosion. The prime causes of land degradation are deforestation, unsustainable farming, mining and excessive groundwater extraction

• India is using 75 percent of the water it can use, and it has “just enough for the future if it is careful”. Freshwater withdrawal today by steel, cement, aluminium, fertiliser, paper and power sectors is equivalent to the total domestic water demand (around 42 billion cubic metres per annum). By 2030,

freshwater withdrawal by these six sectors is expected to increase by 40 percent and freshwater consumption by more than three-fold

• More than 5.5 billion people affected because of increased level of respirable suspended particulate matter in top 50 cities. The estimated public health damage cost due to this stood at INR 150 billion in 2004

• While India remains one of the world’s 17 “megadiverse” countries in terms of the number of species it houses, 10 percent of its wild fl ora and fauna are on the threatened list.

Source: State of Environment, India 2009, Ministry of Environment and Forests


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Government initiatives • Environment and equitable sharing

of natural resources are now prominent concerns of Planning Commission which is beginning work on the 12th Five Year Plan. A committee under the panel is envisaging a climate-friendly economic growth model for the country

• Agricultural Ministry is developing plans for climate-resilient cropping cycles.

• The Panchayati Raj ministry is working towards developing a model to give village councils more power over water resources and forests.

• The Tribal Affairs Ministry is dealing with the implementation of a law that hands back forests to the people who traditionally lived in these green patches.

• The Home Ministry is in discussions to step up reforms in forestry as a key step towards reducing alienation in tribal belts. The PMO is holding meetings to fi gure out how to get auto manufacturers to sell more fuel effi cient cars. It’s actually discussing everything - from climate change negotiations in far away countries to prices of forest products.

• The External Affairs Ministry is engaging with concerns of water and climate across borders.

• The Rural Development Ministry’s MNREGA programme is pushing for afforestation and development of water bodies.

• The Biotechnology Department of the science and technology ministry is pushing a bill to regulate (some say promote) the kind of Genetically Modifi ed (GM) crops that can be grown in the country without impacting the environment.

17 Eco: Sensitive: Jairam has come at the right time for Congress, Times of India, August 28, 2010


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Innovation for sustainable development India Inc needs to begin focusing on the bottom of pyramid (BOP) population as business partners and innovators, rather than just as potential producers or consumers. This would enable companies to develop business partnerships with poor income communities, and also result in the co-creation of businesses and markets that mutually benefi t companies and communities.

“Sustainability is the mother lode of innovations that yield both bottom-line and top-line returns”, Dr. C K Prahalad, eminent thought leader and renowned management thinker. According to him, sustainability should be seen as an opportunity for breakthrough innovation rather than compliance and regulation. The fi rst ones to start developing sustainable technologies as their core strength will command fi rst mover advantage over others. There is a need to build enterprises focused on innovations aimed at sustainable development outside the government but with government support.

Enter Social Entrepreneurs who implement innovative, practical and sustainable solutions to address challenges in numerous areas including health, education, and environment, access to technology and job creation. With the objective of transformational social change these social entrepreneurs develop revenue streams which ensure sustainability in the long run18. Social entrepreneurs function as the agents of change, questioning the status quo, grabbing the new yet overlooked opportunities, and changing the world for the better.

Social entrepreneurship is quietly revolutionizing the less privileged sections of India. Here are some of the more prominent social entrepreneurs in India19.

18 http://www.khemkafoundation.org/awards/sey_awards.php19 http://www.window2india.com/cms/admin/article.jsp?aid=4291#


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• Dr Govindappa Venkataswamy and Thulasiraj D Ravilla established Aravind Eye Hospital in 1976. Till date, it has treated more than 2.3 million outpatients and carried out more than 2.7 lakh operations in 2006-07, about two-thirds of them free. The hospital provides eye care services at a fraction of a cost to the lower income segment by leveraging technology. In order to make eye care services accessible to every one, the concept used was called “Tele-Ophthalmology”. Tele-Ophthalmology is a techno savvy method by which medical facilities are taken to rural or remote areas by using computers, video conferencing and internet.

Arvind tele-ophthalmology network

• Barefoot College, started by Bunker Roy in 1972, has made innumerable school dropouts in villages into ‘barefoot’ doctors, engineers, architects, teachers, designers and communicators.

• Self-Employed Women’s Association (SEWA) started by Ela Bhatt in 1972 provides fi nancial, health, insurance, legal, childcare, vocational and educational services to poor self-employed women, who comprise its members.

• Bhartiya Samruddhi Investments & Consulting Services (BASIX) started by Vijay Mahajan is the fi rst microfi nance project to lend to the poor.

• Narayana Hrudayalaya Institute of Medical Sciences and its network of hospitals run by Devi Shetty perform about three dozen surgeries a day. Of these, 60 percent are carried out at nominal cost or free of charge.

• Technology Informatics Design Endeavour (TIDE) run by S Rajagopalan and Svati Bhogle supports the development of fi nancially rewarding and environmentally-friendly methods invented by leading research institutions into thriving enterprises.

Technological transformation

ICTs are playing an increasingly infl uential role in reshaping trade, growth, employment and production across the globe. They present unprecedented opportunities to combat poverty by increasing income and opening markets, thereby contributing to the attainment of wider development goals.

IT For Change, a non-profi t network located in India, lists more than 50 such projects, some with hundreds of rural technology centers providing

Arvind Eye Hospital Madurai

Public Internet

Arvind Eye Hospital

Coimbatore

Arvind Eye Hospital

Tirunelveli

Arvind Eye Hospital

Puducherry

Arvind Eye Hospital

Theni

Arvind Eye Hospital

Eye Camps

Internet Eye

Care Practitioner

Rural Internet

Service Centre

Partner

Hospital

Associate Eye

Care Institutions

�

�

�

Accelerated hospital's pace of offering the eye care by 10x

Average return on investment: 40 percent

From 7 percent to 100 percent penetration among people who need eye care around the center

services to the public, including poor rural communities. Some of these projects involve signifi cant resources and have demonstrated their ability to deliver desirable social, economic and government services to rural populations.


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Source: KPMG’s Sustainable transformation: The new India

Clean technologies While there is no standard defi nition of ‘clean technology,’ it has been described by Clean Edge, a clean-tech research fi rm, as ‘a diverse range of products, services, and processes that harness renewable materials and energy sources, dramatically reduce

the use of natural resources, and cut or eliminate emissions and wastes.’ It notes that ‘Clean technologies are competitive with, if not superior to, their conventional counterparts. Many also offer signifi cant additional benefi ts, notably their ability to improve the lives of those in both developed and developing countries’

A report by the Coalition for Innovation, Employment and Development (CIED) estimates at least 10 million jobs to be created over 25 years as a result of emerging green technologies.

Venture capital investment in green technologies grossed over INR 56.33 billion in 85 deals in the second quarter of 2009, a 43.5 percent increase from INR 39.24 billion in 59 deals made in the fi rst quarter20. Overall the country attracted INR 111.36 billion of private investment in 2009, placing it tenth in the G-20’s investment ranking21. At the end of 2009, the government launched the Nehru National Solar Mission, a program dedicating INR 45.13 billion to expanding solar power infrastructure exhibiting its commitment to promote clean technologies21.

Financial innovation22 Technological changes relating to telecommunications and data processing have spurred fi nancial innovations that have altered bank products, services and production processes. While some have reduced transaction costs, others have had a positive impact on monetary policy by reducing real household balances. With the increased popularity of online banking, households are able to keep greater percentages of their wealth in non-cash instruments thereby spurring investments.

Some of the innovations which have revolutionarised the banking and fi nancial sector include Microcredit., ECS, RTGS, EFT, NEFT, ATM, Retail Banking, Debit and Credit cards, fund transfers, internet banking, telephone banking, mobile banking, etc.

Gramdoot – Jaipur, Rajasthan

Aksh Optifi bre Ltd. is India’s second largest manufacturer of optic fi ber cables. The company has provided an integrated hardware and software solution for connectivity in the Gramdoot project. Gramdoot provides e-governance through broadband services to 200 gram panchayats in the Jaipur district. The project also provides cable connections to rural households on which 32 television channels are telecast. High-speed, non-dial-up Internet access at 70 Kbps is available to 200 villages. Land records, prevailing market rates of agricultural commodities, Hindi e-mail facilities, application for certifi cates and online grievance opportunities are also provided.

India Agriland – Nellikuppam, Tamil Nadu

EID Parry one of the largest confectionery players, caters to 100,000 sugarcane growers. The company has partnered with

N-Logue Communications Pvt. Ltd. to set up 48 kiosks and has been in operation since 2003. The project disseminates market and commercial information to farmers and provides them with direct access to their markets. Information includes crushing details of sugarcane, payments due to farmers, local news, weather forecast, information on cultivation and farming techniques, e-Mail, etc. These services are provided at user charges ranging from INR 5 -10 per service. Information kiosks also collect oil samples for testing and sale seeds, sugar, tea and candies.

20 PE investments in green tech surge, Hindustan Times, 08 November 200921 India, China Clean Tech Comparison, 2point6billion.com/, April 201022 http://www.indianmba.com/Faculty_Column/FC1165/fc1165.html


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Case Study: SBI’s Bank in a Box*

State Bank of India has a mobile banking kit, which is described as a ‘bank in a box’. This box comprises a cell phone, which acts as a point-of-sale machine, a fi nger print reader and a tiny printer. This is used for opening no-frills accounts that are on smart cards issued to clients. The smart card holds client details such as name, account number, the fi nger print and also the balance in the account. The smart card can hold details of 16 different types of accounts including the loan account. This has capability of putting through transactions both online and offl ine. At the beginning and the end of the day, the transactions could be ported to a base location server, which will update the client and the bank’s books. State Bank of India already runs pilots in project in Mizoram, Meghalaya, AP and Uttarakhand.

*Source: Financial Inclusion: Branchless banking and beyond, May 2010, NABARD


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India in the global village

“The mindset of Indian fi rms is becoming increasingly globalized. It means the entire globe is our playground”,

N.R.Narayana Murthy, non-

executive Chairman, Infosys23

More than a decade of liberalization and continuous efforts on part of Government has opened new avenues for Indian entrepreneurs. In recent years, Indian companies have started taking the initiative of moving into global market and aspire to become ‘Indian Multinationals’.

Changes in regulations on foreign takeovers, growing exports and low interest rates have helped strengthen the Indian rupee, making it cheaper for Indian companies to buy overseas. In a span of 10 years, from 1999 to 2008, the value of outbound deals has attractively increased more than 10 times from INR 47.34 billion in 1999 to INR 502 billion in 2008.

The undercurrent of exploring opportunities abroad is gradually turning into a wave of change which is expected to transform India’s image in the global arena.

Indian companies following a mix of strategies to establish a global footprint24

The attitudinal change to turn global has lead to the emergence of many Indian MNCs who have overcome geographic boundaries by adopting a mix of business strategies. Most commonly, companies have used the route of greenfi eld investments or acquisitions overseas or a combination of both.

Asian Paints, one of the top 10 decorative paint companies in the world, has pursued a globalization strategy of entering fast growing markets with robust demand and low per capita consumption of paints. In the initial years it focused on forming joint ventures with existing players in growth markets. Later, its focus shifted to acquisitions, the most important being that of Berger International, which gave it access to the growing markets in Asia, Africa and the Caribbean countries. Driven by its global vision, the company today services customers across 65 countries and has manufacturing facilities across 22 countries.

United Phosphorus has successfully transformed itself from a domestic insecticide player to a global generic agrochemicals player, through a string of acquisitions of companies and products. Crucial acquisitions of European companies have helped it to establish a strong foothold in the highly competitive developed markets that are dominated by giants like Dow Chemicals, Dupont, BASF, etc.

Tata Steel is fi rmly entrenched as a low cost producer among global steel majors. It has leveraged on captive raw material resources in the form of in-house mines and collieries.

Indian Companies are going to Africa

Many Indian companies are now approaching Africa:

• Bharti Airtel has gained access to 15 African markets by acquiring Zain for INR 506.60 billion

• The Adani group is planning to set up coal mines in Africa after it invested 2.9 billion Australian dollars in Australia

• JSW energy is planning to buy 70 percent stake in South Africa based company IOM to enhance its fuel security

Case Study 2: India’s ‘Sulabh Sauchalaya’ going global

The low-cost Indian toilet system, popularly known as Sulabh Sauchalaya, is now been taken to 50 developing countries in Africa, Asia, Latin America and the Middle East regions.

The movement’s founder, Dr. Bindeshwar Pathak and his team have developed an indigenous two-pit toilet technology that is not only cost-effective but can also be used in producing biogas.

Sources:Bharti buys Zain Africa for USD 10 bn, June 9, 2010, Business Standard

After Oz, Adanis eye coal mines in South Africa, August 10, 2010, Times of India

JSW Energy to buy 70 percent stake in South African fi rm IOM, June 10, 2010, Business Standard

India’s ‘Sulabh Sauchalaya’ going global, May 23, 2010, IANS

23 India Inc. going global, May 13, 2009, articlesbase.com24IBEF.org


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TCS, with 142 offi ces in more than 42 countries world-wide, is not only dominant in English speaking countries, but also has a strong presence in the Spanish and Portuguese speaking regions of the world. Its strategic acquisitions of a banking and BPO business in Chile, and a banking solutions company in Australia, have helped it to gain complementary skills and geographic presence.

It is not only the private sector, but also the public sector, which has been aggressively looking at globalisation opportunities. An interesting example is that of Indian Oil, the company has been pursuing global diversifi cation by targeting exploration opportunities and providing technical services to companies in the Middle East as well as marketing its products across Asia.


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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2010 KPMG, an Indian Partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. Printed in India.

Contacts

Vikram UtamsinghExecutive Director and Head of Marketse-Mail: [email protected]: +91 22 3090 2320

Ramesh SrinivasExecutive DirectorBusiness Performance Servicese-Mail: [email protected]: +91 80 3065 4300

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Documents

Sustainable transformation - KPMG · PDF filecompetitiveness report 2009-2010, ENAM securities, Return of the Urbanite, January 22, 2010. Source: ... Sustainable transformation is