Industry Analysis

Industry Overview Key Market Highlights Smart Energy Business

Two thirds of the worlds population will be living in cities by 2045 Key Customer
The urban population in India would almost double from 2016 to 2050 Segments
Urban areas are expected to contribute 75% of Indias GDP and would
need smart energy solutions for the same Power sector
Global smart energy for smart cities technology revenue is expected to Oil and gas sector
grow from $7.3 billion 2015 to $20.9 billion in 2024 Residential customers
The smart energy market is expected to grow at a CAGR of 14.91% owing Government initiatives
to the rise in installation of smart energy devices and technologies such as
smart grids, digital oil fields, and home energy management system (HEMS)
Smart grids account for the largest share of the smart energy market
Key market drivers
The Americas accounted for the majority share of the global smart energy Rising pressure on urban
market and is expected to maintain its dominance cities
Rising investment in smart
Annual Smart energy Revenue by grid technologies
Region Need for energy
conservation

Key market trends

High rate of deployment of
smart grids
Entry of new players is seen
increasing

Key market challenges

High cost of upgrading smart
grids
Issues related to data
management and meter
device
Smart Energy In Smart City Opportunity
What is our dream ? What is our strategic intent ?
To be a future-ready, growth-oriented Organization Accelerate growth with focus on new products
What are the filters to shortlist areas of innovation ?

High Growth Low on asset Low Time to market At a very young age Mr. Aditya
Birla taught me how to capture
group synergies Harsh Goenka
Low Competitive Rivalry Conducive Business Environment Organisational Capability

How do various areas fare on these ?

CONDUCIVE
ORGANIZATIONAL ASSET COMPETITIVE
INDUSTRY GROUP CAGR TIME TO MARKET BUSINESS
CAPABILITY REQUIREMENT RIVARLY
ENVIRONMENT
SMART GRIDS 16.03% HIGH HIGH HIGH HIGH HIGH

SMART STORAGE 73% MEDIUM HIGH MEDIUM MEDIUM MEDIUM

SMART METERING 8.01% MEDIUM MEDIUM LOW HIGH HIGH

Challenges How to Overcome??

Large investments required with a clear vision, continuous advocacy and strong leadership Strong coordination between all stakeholders including utilities and private entities

Alignment among stakeholders difficult due to varying business models of cities and utilities Phased implementation with investments from multiple public-private partnerships

Technology and standards for interoperability are lagging behind the conceptual smart cities Standardization or localization of technology and interoperability suiting to particular cities

Strict municipal budgets, siloed city departments and staff inexperience with technology Strong push by government and to remove barriers and create consumer awareness
Product Expansion
Smart GRID Smart METER Smart STORAGE
Generation Transmission Distribution
Incorporating additional Automation of energy Two-way communication US$ 340.82
sources of bulk power transmission process between utilities and million
such as solar and wind allowing for reduction consumers to forecast Current size of
and distributed of losses future demand smart metering
generation market

35 Million
Installation -
2019

Industry
4 Global Smart Grid
Ranking of India
Benefits
Accurate meter reading
Proliferation
of Electric
collaboratio Data recording
n with ESCO
vehicles
model

23%
Real time tracking
Opportunities Automatic outage detection
in India
Average Better service
Three full
Efficient use
scale transmission and
of existing
resources
projects distribution
258Cr
losses Opportunity in Smart City Microgrids
40000 MW India to buy 5 million smart meters immediately for pilot Smaller version of the national energy grid
roof top PV
2022
Reduction in commercial losses biggest disadvantage Powered by energy sources including renewable
Distribution companies need ability to address billing Matches local demand rather than national demand
inefficiencies
Awareness Government aiming to outfit approximately 35 million
Regulatory Economic Safety and customers with smart meters
and Capacity
Support Regulation standards Forecast to install 15 million meters by 2020
building

Competitor Offerings
GLAXOSMITHKLINE
CISCO KALKITECH ITRON ACLARA ELI LILLY
PHARMACEUTICALS
Has a smart grid ecosystem Enables seamless integration of Itron modular smart meter Offers both residential and Launched a website which GlaxoSmithKline and
Products Connected Grid their customers field which is upgradable, secure commercial meters contains a database of Madison will develop an
Router and Connected Grid Main products are SYNC ELTRIX and interoperable Robust, flexible and resources i inhaler sensor w
Switch Multi-energy measurement configurable technology
Company Wise Analysis Performance Analysis

Profits (2011-16) CEAT Earnings Per Share (2011-2016)

150
5000 ZENSAR
2 4

Profitability
4000 100
3000
2000 50

1000 KEC INTERNATIONAL

0
0 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
-1000 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
RPG LIFE SCIENCES -50

Ceat Ltd. Harrisons Malayalam Ltd. 1 3 Ceat Ltd. Harrisons Malayalam Ltd.
K E C International Ltd. R P G Life Sciences Ltd. HARRISONS K E C International Ltd. R P G Life Sciences Ltd.
Zensar Technologies Ltd. MALAYLAM Zensar Technologies Ltd.

Strategic Alignment and Market Attractiveness

Companies

High Profit and Decline in companys High growth rate High Profitability High Potential Market Most profitable RPG
Earnings Per Share. tea exports High profitability and High Growth Turnaround Story venture
CURRENT SITUATION Superior quality Highly fragmented revenue Trajectory Company showing Nascent stage in
product at market in India Lucrative Indian Industry undergoing positive results development
competitive prices Market transformation Attractive industry

R&D for innovation Restructure tea Improve number of Focus on digital R&D for innovation Build on initial
Grow international gardens as centre of large value disruption in the IT Customer centric profitability
FUTURE presence tourism construction orders space focussed healthcare Leverage booming
RECOMMENDATION Brand Development Focus on capturing Geographic expansion Develop expertise in services infrastructure sector
rural market data analytics and Global partnerships
solutions
How do we diversify ?
What is our dream ? What is our strategic intent ?
To be a future-ready, growth-oriented global conglomerate. Increase Profitability | Strengthen Market Position
What are the filters to shortlist industries/domains ?

High Growth Low on asset Low Time to market At a very young age Mr. Aditya
Birla taught me how to capture
group synergies Harsh Goenka
Low Competitive Rivalry Conducive Business Environment Organisational Capability

How do various sectors fare on these ?

Conducive Business
Sector Industry CAGR Org. Capability Asset Requirement Time to Market Competitive Rivalry
Environment

Agri-Inputs 7% Low Moderate Moderate Moderate Low

Primary Agri-technology 7% Low High High Moderate Low
Infra. and Real Estate 25% High High High High Low
Food Processing 17% Moderate High High Low Moderate
Secondary
Auto-parts Mfg. 12% Moderate Very High High High Moderate
IT Solutions 12% High Low Low High High
Fin Insurance 8% Low Low Moderate High High
Tertiary
Fin Banking 8.50% Low High High High High
Healthcare Services 15% High Low Moderate Moderate Moderate

Okay ! What specific areas to direct our investments to ?

DIGITAL SOLUTIONS SMART CITY INFRASTRUCTURE HEALTHCARE SERVICES
Digital Solutions - Explore & Exploit

DIGITAL INDIA INITIATIVE Broadband Highways Universal Access to Mobile Connectivity Public Internet Access Programme E-governance ICT

E-kranti e-delivery of
DIGITAL INDIA INITIATIVE Information for all Electronic Manufacturing Digital Banking
services

TRENDS IN PRIVATE SECTOR Social Media Listening Digital Transformation BFSI via Digital Customer Data Analytics

Business Platform
TRENDS IN PRIVATE SECTOR Front end IT Spending Cloud Storage Data Security
Development

Digital Initiatives by Competitors

TCS in Passport Seva Kendra
TCS successful implementation and
operation of the passport project
with the Indian Ministry of External
Affairs stands out from public sector
procurement reforms that have
taken place in many mature markets
and from mixed experiences with
PPP models.
Zylogs- MyGov
One of the companies shortlisted for
providing the analytics platform for
the government's crowdsourcing
platform MyGov is Zylog Systems,
which has a court-appointed
liquidator since November last year.
L&T Infotech - Investments
L&T Infotech, the IT unit of
engineering conglomerate Larsen &
Toubro, plans to seek board approval
to invest in technology start-ups that
the IPO-bound firm hopes will help
boost its digital offerings.
Wipro - MIAL
Mumbai International Airport Pvt.
Ltd. (MIAL), the operator of the
Chakrapani Shivaji International
Airport (CSIA) in Mumbai has
entered into a 10 year contract with
Wipro Infotech, the India and Middle
East IT Business unit of Wipro Ltd.
Tech Mahindra - SEBI
Market Regulator, Securities and
Exchange Board of India (SEBI) has
embarked on the Digital Journey to
transform its processes and End User
experience to serve its internal and
external customers better.

Zensar 75% of revenues still come from App. Dev and Traditional Backend IT Services

Proposed Strategy Wider Solutions to existing client base in Manufacturing, Retail and Insurance

Areas of Investment Based on Internal Capabilities and Market Opportunities

IMS and Cloud Analytics Big Data Enterprise mobility + Oracle Cybersecurity Internet of Things

Source: https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/technology-industry-outlook.html, Digital India Portal, Tech Companies Reports

Smart Grid Solution
Industry Overview Key Market Highlights
Two thirds of the worlds population will be living in cities by 2045 Key Customer Optimal tariff design that promotes
The urban population in India would almost double from 2016 to 2050 Segments Regulation Smart Grid applications
Economic
Urban areas are expected to contribute 75% of Indias GDP and would Investment approval mechanisms for
need smart energy solutions for the same Power sector
Oil and gas sector
Utilities
Global smart energy for smart cities technology revenue is expected to
grow from $7.3 billion 2015 to $20.9 billion in 2024 Residential customers
The smart energy market is expected to grow at a CAGR of 14.91% owing Government initiatives
to the rise in installation of smart energy devices and technologies such as Inter-operability standards
smart grids, digital oil fields, and home energy management system (HEMS)
KeySafety
marketand standards
drivers Standards for Cyber security
Smart grids account for the largest share of the smart energy market
The Americas accounted for the majority share of the global smart energy Rising pressure on urban
Standards for electric vehicle
market and is expected to maintain its dominance cities integration
Rising investment in smart
Annual Smart energy Revenue by grid technologies
Region Need for energy Consumer awareness
Awareness and Capacity
conservation Capacity building for utilities,
building regulators, technology providers
Key market trends
High rate of deployment of
smart grids
Entry of new players is seen
increasing

Key market challenges

High cost of upgrading smart
grids
Issues related to data
management and meter
device
Smart City - Explore and Exploit
WHY.. HOW..

Smart Cities India is all set to become the most-populous country in the world by 2030
LEVERAGE SYSTEM ISSUES CITY & INITIATIVE SELECTION

Under-penetrated market for global manufacturers and service providers Lack of financial investment
Limited technical capacity to ensure
Potential to apply modern technologies and infrastructure for economic growth timely and cost effective
implementation
Absence of competitive talent to
The Government of India allocated INR70.6 billion for Smart Cities in Budget 201415
execute action plans
Lack of effective horizontal and vertical
Indias urban population is expected to rise by 50% by 2050, which is a development avenue coordination among institutions creates
gap for a tripartite framework using
private partnerships
Cities of 4million+ population
State/ Union Territory capitals
Cities of tourism/ religious/ economic
importance
Combine growth and infrastructure
demands enabled by Information and
Communication Technologies (ICT) for
growth
(*A list of cities and business solutions proposed
and being used by the industry has been given in
the appendix)

SMART City Initiatives by Competitors

ESSEL INFRA PROJECTS AND RELIANCE INFRASTRUCTURE MAHINDRA SPECIAL SERVICES

SMART UTILITIES
Making big strides towards The
Smart City Project. Has committed
to invest Rs.7500 crore towards
transforming five major cities of
Madhya Pradesh into Smart Cities
and is evaluating development
projects in infrastructure utility
worth 50,000 crore.
LARSEN & TOUBRO
Formed a new unit to cater to
smart cities, security solutions and
communication projects, expecting
the business to grow to $1
billion in three to four years,
driven by the government's push in
these areas.
LIMITED
Smart cities and defence
manufacturing are supposed to be
the future drivers of growth for the
company. Plans to offer integrated
solutions, what with capabilities in
utilities, transport and telecom.
GROUP
They are one of private players
working as a Master
System Integrator for smart and
safe city projects within the Smart
Cities Mission. Has already
implemented Safe city project for
Lucknow in Uttar Pradesh.
TATA PROJECTS
Has created a dedicated division to
tap the opportunities expected to
be generated by the Smart Cities
initiative. Company is scouting for
opportunities to bid as master
integrators or take up projects with
contract ticket size of Rs.100-500
crore.

Source: http://articles.economictimes.indiatimes.com, http://www.livemint.com, Company reports

Resource Allocation - 3C Framework
Factors Affecting strategy to choose between the two
growth models
Portfolio Level Factors Market Level Factors
Portfolio Diversification Market concentration
Depth of Product Competitive Intensity
Category Market Growth

Firm Level Factors

Move from A (Unused
Prior experience Resources) to C (Untapped
R&D capability Customers)
Financial Leverage Sustain AC (Competitive
Advantage)

Implementation

HealthCare Smart City Digital Solutions

Mobile Applications to remind patients about the

Public Wi-Fi installations Information Management Systems for Insurance Clients
timetable for taking medicines

Health management platform that visualises treatments Smart parking and smart transport to optimise parking Big Data Analytics and Customer Experience Design for
in calendar manage planning of treatments spaces and facilitate better traffic flow Retail

Portal for medicines and medical products; connect Smart kiosk for appliance charging and smart
Oracle Solutions Specially on Cloud for Manufacturing
patients with doctors, path labs etc. environmental sensors to control energy consumption

Patients owning a database of personal health records Smart Grids For Smart monitoring of power usage,
Cybersecurity and Enterprise Mobility for all 3 sectors
for a one to many connection to healthcare organizations surge pricing utilizing the Internet of things
Leverage - The RPG Expertise
KEC International is increasingly receiving orders for Raychem RPG can leverage its expertise in Solar Technology ,
substations, transformers and other power equipment as the specifically the grid connected PV inverters in helping Smart
government has started spending on building infrastructure Cities go solar
Already partially automated plants which will help Apart from infrastructure projects funded by Govt., it can also
manufacturing and fulfil future requirements explore avenues in Manufacturing domain where greenfield
Multi-locational manufacturing facilities and a global reach - projects are being undertaken
Can be leveraged in the SMART city initiative
Zensar has a presence across retail and consumer services, Already existing international partners can be used by RPG
manufacturing, insurance and banking Can be used to Life Sciences for win-win licensing, patenting and sharing
diversify via improved technological capabilities already developed global expertise
Can leverage the existing capability in infrastructure-oriented RPG Life Sciences has a strong outcome based research
services ranges from remote infrastructure management to culture which can be successfully used to drive innovation in
end user computing to data center services and security and the health and wellness domain
compliance.

Grow Beyond The Existing Expertise HOW?

PRODUCT EXTENSION 5 GROW INORGANICALLY
RPG
Zensar should leverage existing client DEGREE OF CHANGE LIFESCIENCES Start-ups like eKincare, Medical
base to develop deeper relationships 4 Unique Identity, Thymr Software
Growth by multiple IT solutions Present in Hyderabad & Bangalore
ZENSAR KEC
mapped to IT spending of clients Small ventures with ~40 employees
3
MARKET EXTENSION ALLIANCE/ACQUISITION
RAYCHEM
Raychem should aim for strong Acquire start-ups like GramPower
imprint in energy sector 2 Alliance with manufacturers in South
It can use the business environment America - Fast growing market
facilitated by the Govt. in clean energy Market consolidation in Brazil - GE,
sector 1 2 3 4 5 ABB etc.
TYPE OF GROWTH
APPENDIX
APPENDIX

PROPOSED SMART CITIES SMART SOLUTIONS - ILLUSTRATIVE LIST

Source: Ministry of Urban Development, Business World Smart Cities Journal Source: Smart Cities Expo May 2015
APPENDIX DATA ANALYSIS XLS SHEET