Entry Strategy into Green Construction for Mahindra EPC

Team: Rebel Yell

Campus Name: IIM Bangalore
Naveen K. Poddar 1211278
(naveen.poddar@iimb.ernet.in) -2nd Year
Rohit Jaiswal 1211293 (rohit.jaiswal@iimb.ernet.in) -2nd
Year
Shrey Sahay 1211294(shrey.sahay@iimb.ernet.in) -2nd
Year
Vivek 1211315(vivek1@iimb.ernet.in) -2nd Year

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Approach to the Problem

Market analysis
Market
dynamics

Competitive
landscape

Macro-economic
outlook

Internal SWOT

Regulatory
environment

Internal assets /
Technology

Identified strategic risk areas

Summary and conclusions
Market opportunity description

Market entry strategy

Vision and Mission
Objectives
Overall Strategy
Positioning
Value proposition
Brand
Target segments
Strategic directions
Pricing
Brand and communication
Sales and distribution

Products and services

Customer service
Launch phasing

Tactical launch plan

Execution of Market Entry

Summary

Approach

Market
Analysis

Target
Segment

Macroeconomi
cs

Competition

Regulations

VRIO

Risks

Summary

Market Analysis
Market Assessment
The market for LEED-rated green buildings in India is projected
to increase to 3.7 billion by 2012
The total market for green building materials and equipment in
India is estimated to be more than 10 times the size of the
LEED-rated green building market in India.
Indias green building footprint has grown from 20,000 sq. ft. in
2005, to projects covering 914.33 million sq. ft. by end-2011
The projected market potential for green building material and
technologies is estimated to be 73.4 billion by the year
2012.

Growth of Green Buildings in

India

Source: IGBC

Green Buildings in India

According to IGBC:
India has 1297 registered buildings, 201 certified buildings and
914.33 million sq. ft. of green building footprint.
This puts India firmly on the 2nd spot only behind the U.S in
total green building footprint.

Benefits of Green Development

Financial Benefits
1. Reduced capital costs
2. Lower operating and maintenance
costs
3. Reduced risks and liabilities
Environmental Benefits
1.
Less
impact
on
the
natural
environment
2. Healthy environments and improved
productivity
Social Benefits

The graph shows the tremendous rise in the green buildings with a
rapid growth rate in the recent years in India

Market Transformation and huge growth- WHY?

Green Buildings make good business sense Material
!!!
Incremental cost of a commercial green
building 3-5 % while a green home incremental
cost 1 %,
The additional costs gets paid back within an
attractive span of 3 to 4 years with substantial
reduction in operational costs.
Market potential for green building
products & technologies would be about
USD 100 Billion by 2015 for India

Cost in INR2003

Cost in INR2011

Waterless Urinals

15,000 per
unit

6,000 per unit

CO2 Sensors

50,000 per
unit

20,000 per unit

Certified Wood

Sharp decline in
High Performance

2,500 per cu.

1,600 per cu. ft.
ft.
green building material

costs
500
per sq. ft.

350 per q. ft.

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Target Segment- Factory Buildings In India

FACTORY BUILDINGS SEGMENT

Source: Statistics of factories ,

2009

Share of Factory Buildings

As per the Central Statistics Office and the

National Sample Survey Office, the total
number of estimated factories in India in
2010-11 stood at 2.1 lakh.
This was 33.2% higher than a year ago.
The highest number of factories was
seen in
Food products
Other non-metallic mineral products and
Textile
sectors.
Green
Factories
in India: Why is it

3%
60%

Food Products & Beverages

Public Sector

Contribution of Buildings in
India:

of pollution and energy consumption in the

Total Energy Use
25-40%
World
Solid Waste generation
30-40%
Most of the manufacturing factories consume vast
quantities of fresh water to carry away wastes
Global Green House gas
30-40%
of several different types.
emission
This clearly shows the huge
Factory pollution includes carbon monoxide,
negative impact of buildings,
which is mainly produced in combustion processes
especially factory buildings on our
Factory pollution includes CFCs, which have been
environment.
Green
Factory Certification System
shown to destroy the ozone
layer
Measures prior to 2010

20%
10%
10%

97%

important?
Factory related pollution is the number one source

Source: Statistics of factories ,

2009

Share of Factory Buildings

Management indicator

Preventing
Global Warming

Energy-saving measures for

reducing CO2

CO2 emissions (per unit of

production)

Supporting a
recyclingoriented society

Zero waste activities

Waste discharged externally

Final disposal rate
of waste discharged
externally

Material
Conserva
tion

Aspects of a
Green
Factory

After 2010

Integrating each
Approach and Aiming
for
comprehensively
environmentally

Energy
Conserva
tion

Innovatio
n

Indoor
environm
ent
Quality

Water
Conserva
tion
Site
Selection
and
Planning

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Competitive Landscape
Mahindra EPC is currently present in the
Solar EPC Market
SOLAR EPC LANDSCAPE

DOMESTIC PLAYERS

The three biggest domestic Solar EPC Players include Mahindra Solar,
Larsen and Toubro, and Sterling & Wilson

INTERNATIONAL PLAYERS
International players like Juwi, Martifer, and Conergy are entering the
sector due to its burgeoning opportunities
JOINT VENTURES
The major joint ventures in India include Enfinity-Titan, VikramsolarProener, and Greenforce-Gehrlicher Solar.

Other EPC construction firms which may prove potential threat in

future by entering into green construction segment
But, they would primarily outsource or rely on partnerships to start
which Mahindra EPC can leverage by being 1st mover

Price competitiveness and quality regarded as the most

sought after advantages of EPC services.
Value-added services and vertically integrated businesses
are less important, but still register as competitive
advantages

OTHER EPC PLAYERS- POTENTIAL FUTURE THREATS

JP ASSOCIATES
JP associate is a flagship company of Jaypee group. JP associates is one of
the prominent business unit in EPC sector in India and has been in the civil
engineering construction sector for past 4 decades as a turnkey project
company mainly deals in mega hydro projects, construction and
transportations.
LANCO INFRATECH
This Company has a powerful EPC work profile mainly in the sector of
power, solar and infrastructure. Company has completed a number of
thermal and power projects including Solar Energy.

IVRCL
IVRCL is top Engineering, procurement and Construction Company which
executes various types of projects such as civil construction, power,
irrigation, industrial structure and mining. IVRCL has a long client list
which includes top government sector companies like ONGC, BHEL,
Power
grid corporation of India, IOCL.
TATA PROJECTS
Tata Projects established in the year 1979 is a part of the prestigious
Tata Group. It is amongst best EPC companies in India, which delivers
the project on time without compromising quality.

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Competitive Landscape
Major Real Estate Developers Energy Efficiency Activities

Developer

Building Type

Ansal Properties &

Infrastructure Limited
DLF Limited

Hiranandani Group
K Raheja Corp
Omaxe Ltd.
Parsvnath Developers
Sobha Developers
Unitech Group

Supply
The past few
years has seen a
substantial
increase in the
number of
contractors and
builders but still
the supply is low
LOW

Location

Efficiency Actions

Residential, IT parks, commercial, SEZs

Pan-India, North India focus
Developing integrated townships with malls
and hotels
Residential, commercial (offices, retail
Indias largest real estate developer (29 cities,
property) ,Hotels, infrastructure, SEZs
across 16 states)
Majority of projects in Gurgaon, Haryana; DLF
City, more than 3,000 acres, is Asias largest
private township
Active in Kolkata, Hyderabad, and Chandigarh
Commercial (hotels, retail, IT offices), SEZ,
Major presence in Mumbai, with increasing
and residential
presence in other metro cities

Ansal Esencia Township, Gurgaon registered

as a pilot project for GRIHA rating

Commercial (hotels, retail, IT offices), SEZ,

and residential
Developing 15 townships and 10 hotels
Residential, commercial (malls, office spaces,
IT parks)
Residential, IT park, commercial and SEZ

Residential, commercial (hotels, offices)

MoU with CII-IGBC to facilitate LEED certification

for 10 large-scale projects, in Mumbai, Pune,
Ahmedabad, Hyderabad and Chennai
Constructed the energy-efficient Trade Tower in
Chandigarh
Part of study on energy efficiency in India

Mumbai focus
Developments in Bangalore, Ahmedabad, Goa,
Pune, & Hyderabad
North India focus, active in 40 cities, 12 states

Pan-India, National Capital Region (NCR) focus

Active in more than 46 cities, 15 states
Bangalore focused along with Coimbatore,
Mysore, NCR and Pune
Residential, commercial and SEZ
Pan-India footprint (NCR, Kolkata, Chennai and
Competitive
landscape
of GREENHyderabad)
FACTORY SEGMENT
Retail, hotels, and
integrated townships

Demand

Barriers to entry

Demand exceeds
supply by a large
margin
HIGH

NO entry barriers
for existing
developers in
offering green
solutions.
LOW

Bargaining Power
off Suppliers
Due to the rapid
increase in the
number of
contractors and
construction
service providers
MODERATE

Bargaining power
of customers
The country still
is less prone to
green factories
LOW

Provided partial funding and expertise to UNDP

and BEE on ECBC implementation118
Set up DLF utilities for captive power
Installed natural gas-based Combined Cooling
Heating and Power systems for commercial
buildings
Designed BG House, a Platinum LEED building

Develop Infosys energy-efficient buildings

Develop IGBC accredited buildings
Indian Green Building Council member
CONCLUSION
NCR developments registered
as LEED Core or
Shell rating We can say that:

Competition
There has been
significant
increase in
number of green
construction
companies
HIGH

We can say that:

The penetration into the
green factory is low
There is a demand-supply
gap
The competitive landscape
is
ideal
for
the
market entry into this
segment.

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Macro-economic Outlook
MACROECONOMIC SCENARIO
The national GDP expected to grow at about 7%
The contribution of the manufacturing sector
to the national GDP being quite significant at 25%
Therefore, more and more factories would be
set up in the country.

TOWARDS GREEN FACTORIES

While the growth is imminent it is
imperative that the development should
happen in an environmentally sustainable
manner.

Macroeconomic factors driving Green factories

Fuel Imports And Energy Efficiency

Due to rise in standard of living economic activities are increasingly becoming energy and
technology intensive
The rising fossil fuel demand has evoked a fear of running out of fuel reserves in the future and
fear of huge imports
Industries
And
Water
Efficiency
Buildings consume Agriculture,
significant amount
of energy, of
which
there is
a potential to save 30 to 40%.
Agriculture is the main stay of Indian population and economy which sustains on water resources
70 percent of Indias irrigation needs and 80 percent of its domestic needs are met by
groundwater
Water demand is expected to rise with the expanding urbanization and industrialization thus
Effective water management strategies need to address the crisis

Dependency on Virgin Materials

Rising industrial needs demand greater use of materials for various activities.
Use of non renewable, virgin materials would pose a risk of depleting the available natural
resources.

Waste Management and Environment

With expanding industrialization and urbanization, the quantity of waste generated is increasing.
In the present waste management scenario, almost 90% of the waste generated requires around
1,200 hectares of land per year for disposal.
The waste is either dumped or burnt, producing hazardous gases and leeching of toxins into the
soil thereby affecting the productivity of our land

Far reaching impacts on saving natural

resources, betterment of working conditions
and enhanced productivity
Thereby leading to substantial national
benefits

BENEFITS- Tangible + Intangible

The most tangible benefits are the reduction

in water and energy consumption right from
day of occupancy.
The energy savings could range from 30
40 % and water savings around 20 30%.
Intangible benefits of green factory include
enhanced indoor air quality, good day
lighting, health, well-being and safety of the
workmen.
Address national issues like energy
efficiency, conservation of natural resources,
handling
of
consumer
waste,
water
efficiency and reduction in fossil fuel use in
CONCLUSION
commuting.

We can say that:

In the current macro economic outlook,
the future of green factories is very
bright in India

ideal
opportunity for Mahindra EPC
to enter into this segment
This

would

present

an

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Policy Environment
Policy and Regulatory Environment in India
India has a number of policy initiatives to mainstream energy
efficiency and
green buildings as control and regulatory instruments:

Energy Conservation Building Code 2007

The Energy Conservation Act 2001 provides for the establishment of
state energy conservation agencies to plan and execute programs.
The Act led to the formation of Bureau of Energy Efficiency (BEE)
that formulated the Energy Conservation Building Code (ECBC)

The Ministry of Environment and Forests (MoEF),

Environmental Impact Assessment (EIA) and
Clearance
This is a mandatory requirement for all buildings with a built up
area above 20,000 sq. m and such projects have to be apprised by
the MoEFs Environmental Appraisal Committees (EACs) and the
State Environmental Appraisal Committees (SEACs).

The Ministry of New and Renewable Energy

It initiated several programs focusing on the utilization of renewable
energy sources in buildings.

Rating Systems

LEED

LEED-India was launched in 2001 and rates buildings on environmental

performance and energy efficiency during the design, construction and
operation stages.

GRIHA

CONCLUSION
We can say that:
The Policy and regulatory environment in India is very friendly to
promotion of green construction
The policy environment is ideal for Mahindra EPC to enter into
this market segment

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Internal Resources & Capabilities Analysis of Mahindra EPC

mework explains the Resources & Capabilities of MEPC which are giving it Sustainable Competitive Advantage

Resources and Capabilities

Green
Tech.

Rain water harvesting

Water Recycling
Low conductivity materials &
insulation
Lighting solutions LEDs, lighting
sensors
Glass - High performance,
recyclable
Heat Recovery wheels
HVAC systems (Continuous & On
Demand)
High reflective materials
(Aluminium, paint)
Green design and process
Solid Waste Management

Costly
to
Valuabl Rar Imitate Exploite
e?
e?
?
d?
Y

Competitive
Advantage?
Temporary
Advantage
Sustained
Advantage
Sustained
Advantage

Parity

Y
Y

N
N

N
N

N
Y

Parity
Parity

Parity

Parity
Temporary
Advantage
Temporary
Advantage
Sustained
Advantage
Sustained
Advantage
Sustained
Advantage
Sustained
Advantage
Parity
Sustained
Advantage

Solar panels - Rooftop & facades

(Transparent modules as Window)

Engineering

Logistics & Supply chain

Contracting Expertise
Marketing

Y
Y

Y
N

Y
N

Y
Y

Internal Fund Generation

Expertise

Finance

Rationale
leverage same vendor as used by Mahindra Lifespaces
Leverage capability of Mahindra Water Utilities
Patented Low thermal conductivity - High Volume Fly ash Concrete by
Mahindra Splendrour
Though capability not present, this category is commodity hence should
be outsourced.
Though capability not present, this category is commodity hence should
be outsourced.
Leverage capability of Mahindra Engineering Services
Leverage capability of Mahindra Engineering Services
Process steel but not aluminium. Leverage VOC content paints &
adhesives by Mahindra Life
New to Green Factory Construction
New to Green Factory Construction
Leader in India with more than 2.5 MW Solar Rooftop projects
Partner - Mahindra Consulting Engineers & Mahindra Engineering Services
Mahindra Logistics and warehousing can be leveraged.
Long experience of contracting vendors for big projects. Reduces search
cost
Since it is a B2B scenario, branding activity is not very costly.
Mahindra Finance has network of financers and investors for project
financing.

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Strategic Risk Areas to be Mitigated

Lack of
awareness
about green
buildings

1. Regulatory Risks
Removal of Incentives currently provided by government.
This could de incentivize the clients from moving towards green factories

2. Product Development Risks

Failure to
Combat the
myth of higher
cost of green
buildings

Regulatory
Risks

3. Partnership/Third Party Risks

Strategic
Risks

Capital
Investment
Risks

Offerings of full turn key solutions would require third party outsourcing
or strategic partnerships for certain product offerings
This might correlate our risk to the partners risk, thereby affecting our
performance
Product
Development
Risks

Third
Party/Partnersh
ip Risks

In order to create long term competitive advantage, development of new

technical product offerings is inevitable
This might increase the risk associated with the product if it requires
huge R&D expenditure

4. Capital Investment Risks

Huge initial capital investment in in product research and capability
development for the new products
The products or the processes might get outdated, leading to huge
capital investment losses

5. Lack of Demand due to myth

Failure to combat the myth that the green factories/ buildings are more
expensive than normal buildings in the long run
This might affect the generation of demand, thereby increasing the
associated risk of performance

Approach

Market
Analysis

Target
Segment

Competition

Macroeconomi
cs

Regulations

VRIO

Risks

Summary

Summary of Market Analysis and Opportunity

SUMMARY
MARKET TRENDS
The green construction market in India is growing at a
tremendous rate
Market potential for green building products & technologies
would be about USD 100 Billion by 2015 for India
Within green construction, the potential for green factory
Favorable
to enter
green factory segment
segment
is also huge

COMPETITIVE LANDSCAPE
Number of solar EPC and construction EPCs in the market but
no one is targeting the turnkey market in the green factory
segment
Mahindra EPC would have a 1st mover advantage and
competitive analysis is favorable based on porters forces

MACROECONOMIC OUTLOOK
The current GDP growth is also fuelled by the industrial growth
which demands for factory settlements
The green factory offers the most viable and sustainable
solution to the national environmental and energy concerns

POLICY ENVIRONMENT
The government offers number of incentives to the owners of
green buildings and factories, thereby promoting it
There are numerous financial schemes and two rating systems
to develop the green factory environment in India

Favorable to enter green factory segment

Favorable to enter green factory segment

Favorable to enter green factory segment

STRATEGIC RISKS
There are certain strategic risks which is involved with venturing
into green construction segment, but these risks can be
mitigated

Favorable to enter green factory segment

CONCLUSION

The market opportunity of entering into the Green factory construction segment is favorable for
MAHINDRA EPC
Offering the end to end turn key product solutions mitigates the cyclic risk associated with
its current solar EPC model

Being the 1stEPC

mover,
MAHINDRA
EPC
canGIVEN
create MARKET
sustainable
advantage for the
long
THERFORE, MAHINDRA
SHOULD
ENTER
THE
i.e.competitive
GREEN CONSTRUCTION
SEGMENT
OF
term market leadership
FACTORY BUILDINGS

Market Entry Strategy

Market analysis
Market dynamics

Competitive
landscape

Macro-economic
outlook

Regulatory
environment

Internal SWOT

Internal assets /
Technology

Identified strategic risk areas

Summary and conclusions
Market opportunity description

Market entry strategy

Vision and Mission
Objectives
Value proposition
Overall Strategy
Target segments
Positioning
Brand
Strategic directions
Pricing
Brand and communication
Sales and distribution

Products and services

Customer service
Launch phasing

Tactical launch plan

Execution of Market Entry

Methodolo
gy

Vision

STP

Business
Model

Offering

Partnershi
p

Innovation

CVM

Pricing

Research Methodology

Primary research

Telephonic interviews with:

Mr. Apoorva Pande (Senior consultant, Energy Utilities, PwC Hyderabad)
Mr. Vishwajeet Kumar (ex-employee, Consultant, GL Garrad Hassan)
Mr. S.S. Das (AGM, Project execution, NTPC, Bilaspur)
Interviews with professors at IIM Bangalore

Secondary research
Databases: NSO, CRISIL, MNRE, IEA, Labour Bureau, UNIDO, IGBC, LEED US, GRIHATERI
Annual reports: Mahindra Group companies

Sales

Methodolo
gy

Vision

Business
Model

STP

Offering

Partnershi
p

Innovation

CVM

Pricing

Vision, Mission and Objective

Vision

Mission

To become the biggest EPC company in the world in

green construction space by providing clean and
safe environment through constant thrust on
innovation and growth.

To innovate and develop reliable and

efficient end-to-end green construction
solutions for clean and sustainable
environment .

Objectives
Develop sustainable building techniques that minimize
construction waste, build healthier indoor environments, and
reduce energy use while conserving natural resources.
Reduce, Recycle: Promote resource conservation and renewable
energy.
Create economic, environmental and social value through green
construction.
Communicate the economic, environmental and social benefits of
green construction to the public, industry, and government.
Develop partnership with realtors and other stakeholders for
research and understand green building features and benefits.
Develop green construction professionals by equipping them with
required tools through well directed training programs.

Sales

Methodolo
gy

Vision

STP

Business
Model

Offering

Partnershi
p

Innovation

CVM

Pricing

Sales

Target States of India

Rationale for doing statewise segmentation:
Policies vary across
states
Regulatory norms &
renewable energy
incentive structure might
differ across states
Geography plays a major
role in the effectiveness of
renewable
energy sources
Linear interpolation
done
according to following:
Factory score: 1- 10
Solar energy potential: 5
10
Rainwater harvesting
potential: 7 10
Higher weight age was
given to number of
factories and least to
rainwater potential
because rainwater
harvesting plays
comparatively
insignificant role in the
whole solution and more
so, there was much less
deviation in rainwater
across the regions as

State/Union
Territory

Number of Factories
2009-10 (Source:
Labour Beaureau)

Average annual
rainfall (in mm)
(Source: IMD)

Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chhattisgarh
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Nagaland
Odisha
Punjab
Rajasthan
Sikkim
Tamil Nadu
Tripura
UttaraKhand
Uttar Pradesh
West Bengal
A & N. Island
Chandigarh
Dadra & N Haveli
Daman & Diu
Delhi
Lakshadweep
Puducherry

17153
10
2247
1918
1976
520
15576
4640
1545
626
2032
8541
5907
3523
19457
85
100
90
2052
10262
6811
46
26790
407
2344
11015
6818
13
284
1103
1447
2878
2
671

900.7
2,935.90
2,255.80
1,230.80
1,368.40
3,045.20
716.3
558.6
1,323.80
1,232.70
1,320.70
1,145.80
3,097.40
1,093.70
1,147.00
1,370.80
7,281.30
1,910.80
1,472.60
648.8
460.8
3,090.50
910
2,400.20
1,582.60
979.4
1,734.50
3,001.70
1,077.70
2,212.00
625
794
1,584.70
1,363.20

Solar energy
potential (in
kWh) (Source:
NSO)
5.6
5.3
4.7
5.5
5.3
5.4
5.8
5.5
5.4
5.2
5.4
5.4
5.4
5.5
5.6
5.1
4.9
5.1
5.5
5.5
6.1
4.8
5.6
5.1
5.3
5.6
5.5
5.2
5.5
5.5
5.4
5.5
5.2
5.5

Rain water
harvesting
potential score
7.19
8.09
7.79
7.34
7.40
8.14
7.11
7.04
7.38
7.34
7.38
7.30
8.16
7.28
7.30
7.40
10.00
7.64
7.45
7.08
7.00
8.16
7.20
7.85
7.49
7.23
7.56
8.12
7.27
7.77
7.07
7.15
7.49
7.40

Solar
Energy
Potential
score
8.21
7.14
5.00
7.86
7.14
7.50
8.93
7.86
7.50
6.79
7.50
7.50
7.50
7.86
8.21
6.43
5.71
6.43
7.86
7.86
10.00
5.36
8.21
6.43
7.14
8.21
7.86
6.79
7.86
7.86
7.50
7.86
6.79
7.86

Market
potential
score

Overall score

6.76
1
1.75
1.64
1.66
1.17
6.23
2.56
1.52
1.21
1.68
3.87
2.98
2.18
7.54
1.03
1.03
1.03
1.69
4.45
3.29
1.01
10
1.14
1.79
4.7
3.29
1
1.09
1.37
1.49
1.97
1
1.22

7.39
5.41
4.85
5.61
5.40
5.60
7.42
5.82
5.47
5.11
5.52
6.22
6.21
5.77
7.69
4.95
5.58
5.03
5.66
6.46
6.76
4.84
8.47
5.14
5.48
6.71
6.24
5.30
5.41
5.67
5.35
5.66
5.09
5.49

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Target Industry
The various industries in the manufacturing sector
were split on the basis of two dimensions:
Energy usage
Energy consumption as a % of total energy
consumption in the manufacturing segment
Higher energy usage industries will have higher
energy savings and hence, higher value can be
provided to these customers. More so, higher value
can be charged from these customers for the
offering.
High energy-consumption as a % of total energy
consumption reflects the market size in some sense
which is relevant for our purpose.
However, this might not be an accurate measure
because the solution provided would mainly include
energy savings in auxiliary domains. Energy savings
in the main production process, etc. might not be
that easily achievable. Also, fuel energy might not
be replaced by energy due to solar PV etc. in many
domains.
If we continue to target industries using this metric,
we should target industries like Chemical products,
basic metals, food products, refined petroleum in

Industry
Manufacture of textiles
Paper and paper products
Coke and refined petroleum
products
Chemical products
Non-metallic mineral products
Manufacture of basic metals
Food products and beverages
Wearing apparel; dressing and
dyeing
Manufacture of leather products
Wood and wood products
Printing and publishing
Rubber and plastic products
Fabricated metal products
Tobacco products
Machinery and equipment n.e.c.
Office, accounting and computing
machinery
Electrical machinery and apparatus
n.e.c.
Radio, TV and communication
equipment

Energy intensive

Overall energy
consumption (in
%)

High energy-intensive
High energy-intensive

7
1.3

High energy-intensive
High energy-intensive
High energy-intensive
High energy-intensive
Moderate-energy
intensive
Moderate-energy
intensive
Moderate-energy
intensive
Moderate-energy
intensive
Moderate-energy
intensive
Moderate-energy
intensive
Moderate-energy
intensive
Low energy-intensive
Low energy-intensive

16.6
12.4
2.6
13.7

Low energy-intensive

0.4

Low energy-intensive

3.6

Low energy-intensive

1.9

13.5
1.5
0.9
0.3
0.8
2.9
2.7
0.5
5

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Positioning and Brand Building

Positioning
MEPC Green Factory Construction
positions itself pioneer of:
Quality Solutions Why?
External Focus- These projects require
huge capital investment and should
provide seem less operational facilities.
Internal Focus - MEPC currently stands
for uncompromising quality.
Next Gen Technologies Why?
External Focus- To allay the fears
related to technology risks.
Internal Focus - MEPC has innovation
driven culture and strong R&D
capabilities.
Flexible Offering Why?
External Focus- Diversity in regions,
sectors and client companies strategies.
Internal Focus To minimize the
business risk of a new market by gaining
more clients.

Resonance
Customer
relationshi
Relationships:
p
What about you
manageme
and me?
nt, account
managers
would play
a major
roleFeelings
Judgmen
Feeling of a
Brand
ts
quality product
Response:
can come if
ValueWhat about
Mahindra EPC
forcan get LEED,
you?
money
IGBC
image
certifications for
Reputation
its solutions.
essential
Performance

Brand
Meaning:
What are you?

Brand
Identity: Who
are you?

Reputation of
Mahindra EPC to be
stressed by
displaying past
achievements +
showcasing the first
of its kind provider
of gen-next
solutions
Salience

Flexibility,
customized
solutions, Quality
of products need
to be focused
while branding.

Mahindra EPC has a strong brand equity deriving its

strength from Mahindra brand name. It has to however
start branding its image as a one-stop, quality solution
of next generation factory buildings

Sales

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Business Model
EPC contract model- AVAILABLE OPTIONS
Owner
Specifies
PMC project
Consult,aims and
advice,objectives
supervise &
EPC
assist owner in
Contractor
defining the
scope,
contract
tendering etc.

Owner
Administer the
contract management
EPC Contractor
Single point of
responsibility,
communication and
coordination
Product
offerings

Vendors

Specialist
Consultan
ts

2. Project Management Contract (PMC) Structure

3. Project Lump Sum (PLS) Structure

This model is a hybrid of Option 1 and

Option 3

Owner
Administer the contract
management
The entire project is
separated
into
preagreed stages, which are
awarded on lump sum
basis within the scope of
contract

EPC Contractor
Single point of
responsibility,
communication &
coordination
Specialist
Consultan
ts

The entire project is

separated into preagreed stages, which
are awarded on lump
sum basis within the
scope of contract

WHY THIS MODEL?

PROPOSED CONTRACT MODEL TO

BE ADOPTED

Vendors

EPC
Contractor
Single point of
responsibility,
communication
& coordination

Operation
&
maintena
nce

1. Engineering, Procurement and

Construction (EPC) Contract Structure

Product
Offerings

Owner
Administer the
contract
management

Operation
&
maintena
nce

1. Why Option 1- Single Point EPC Contract

Structure?
. Here, a single-point contract is awarded which
includes the entire supply of materials, design,
engineering,
procurement,
construction
and
installation works.
. This will help us deliver our turnkey solution as
per our long term strategy
2. Why Option 3- PLS Structure?
. Here the project will be separated into pre-agreed
stages, which are then awarded on lump sum basis
within the scope of an EPC.
. This is very important because Owners enjoy the

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Business Model
Recommended EPC Contract Model in Detail- SINGLE POINT CUM PLS STRUCTURE

Regulatory
Authority

Utility/PPA

Financing
Institutions/ Banks

Owner
Administer the contract
management

Project
Consultant

BoS Suppliers or
Partners

EPC Contractor
Single point of responsibility,
communication & coordination

Module/Equipment
Supplier or Partners

The entire project is

separated into preagreed stages, which
are awarded on lump
sum basis within the
scope of contract.
Benefits of this model

Vendors

Energy
Efficiency

Product
offerings

Water
Managem
ent

Specialist
Consultants

Waste
Managem
ent

Operation &
maintenanc
e

Indoor
Quality

SINGLE POINT MODEL

This enable Mahindra EPC to meet its
strategic objectives of being a one-stop end
to end turn-key solution provider
PLS STRUCTURE
In short term, this enables Mahindra EPC
to gain the trust of customers and gain more
contracts as this reduces the risk exposure of
the clients
In long term, Mahindra EPC can move
away from PLS structure to a completely

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Product Features for Turn Key Solution

IGBC (Indian Green Building
Council) Green Factories
rating system addresses
sustainability in industrial
buildings. The programme is
fundamentally designed to
address national priorities
and
quality of life for factory
Certification
workmen.
Level Points
Certified 51-60
Silver
61-70
Gold
71-80
Platinu
m
81-100

Insulation of roof and exterior

walls to reduce heat ingress and
make air conditioning more
efficient

On Demand HVAC Energy

efficient chillers, AHUs. Heat

Category Points for IGBC Green Factorie

Water
Conserv
ation

Energy
Conserv
ation

Material
Conserv
ation

Indoor
Environ
ment
Quality
&
Occupati
onal
Health

Innovati
on &
Design
Process

Site
Selectio
n&
Planning

Green Features under IGBC Green Factory Building Rating

System

Design to maximize the use of daylight and

ventilation
Materials used should be sourced locally,
have a recycled and contribute to healthy
indoor

Energy efficient lighting

fixtures like LED and T5 with
lighting control system

Green Factory

Water - Rainwater harvesting,

water efficient fixtures, water
recycling

Glass low SC and low U-Value to

protect from heat transmission
through windows. High VLT to allow

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Overall Strategy of Making a Green Factory

Plan SITE
Selecting a
site where
regulations
compliance
is easy
Access to
Transport
System
Soil Erosion
prevention &
control
Contaminate
d Site
Remediation
Design for
Differently
Abled

Apply
DESIGN
STRATEGIES

Select
GREEN
MATERIALS

Orient
windows on
South and
North
faade
Provide
buffer
spaces on
East and
West
Provide
shading for
windows
(through
overhangs,
blinds,
vertical
fins)
Provide
sufficient
windows
for
daylighting
but restrict
extensive
glass to
avoid heat

Select
LOCAL
manufa
ctured
materia
ls
(within
800 km
radius)
Select
materia
ls with
RECYCL
ED
content
Give
prefere
nce to
RAPIDL
Y
RENEW
ABLE
MATERI
ALS like
Bambo
o

Implement
strategies for
ENERGY
CONSERVATION
Rooftop insulation
Occupancy sensors (in
restrooms)
Daylight sensors
Efficient lighting layout (use
T5 or LED lights)
Efficient HVAC system
(evaluate efficiencies and
design the system according
to the specific requirements)
Building management
System (BMS) to control
lighting and aircondition
requirements
Use double glazed windows
(for air-conditioned spaces)
Use building materials with
insulating properties like
AAC blocks, hollow brick
blocks
Use solar reflective paints
on the roof or implement a
green roof
Use a solar hot water
system

WATER
CONSERVATI
ON
Install
Rain
water
harvestin
g system
Use lowflush
toilets &
urinals
Select
low-flow
fixtures
Install a
sewage
treatmen
t plant
(STP)
Reuse
treated
water for
landscapi
ng
Design a
watereffi
cient
landscapi
ng

Install RENEWABLE
ENERGY
Install
photovoltai
c panels on
Rooftop
Use
groundsource
heat
pumps
Evaluate
the
installation
of a small
wind
turbine
Use
organic
waste to
operate a
biogas
plant

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In-house or Outsource Green Features

Green Features

Short run

Long
run

Remarks

Solar energy solutions

In-house

In-house

Competitive advantage in short-run. Strong brand association with solar energy

solutions.

Rain water harvesting

solutions

Outsource

In-house

Mahindra Water Utilities only provides waste water treatment utilities. In the long
run water harvesting capabilities can be developed as the technology is not very
difficult to learn.

Low conductivity materials

and insulation

In-house

In-house

Fly ash bricks are manufactured in-house. Patent for low thermal conductivity fly
ash bricks. Very high on value addition (useful for roads, walls, etc.), should be
continued in-house.

Lighting solutions LEDs,

lighting sensors

Outsource

Outsourc
e

Almost becoming a commodity and hence need not develop this expertise in the
long run.

Glass - High performance,

recyclable

Outsource

Outsourc
e

Commodity and hence can be avoided to be manufactured in-house in the long run.

Heat Recovery wheels

Outsource

In-house

Essential for supporting HVAC systems and hence should be brought in-house in the
long run.

HVAC systems (Continuous &

On Demand)

In-house

In-house

Mahindra Engineering Services has this expertise in the automotive sector. It can
easily be replicated in the green building domain with minor modifications.

High reflective materials

Aluminium, special paints

Outsource

Outsourc
e

Aluminium manufacturing requires high capital expenditure and they dont have inhouse manufacturing capability currently.

Green Design and Process

Outsource

In-house

A great value addition can be provided through this. Has a lot of importance and
hence should be brought in-house. In short run, they have expertise only in solar
technology domain but not in other sectors.

Solid Waste Management

Solutions

Outsource

Outsourc
e

Not a very value adding product and hence should be kept outsourced even in the
long term. Lack of knowledge wont hurt them in long run.

Construction
equipment
Outsource
In-housegroup
Mahindra Construction Equipments product Earthmaster can be used. Many
*In-house means
manufactured
by one of Mahindra
(mainly)
construction equipments might have to be outsourced. Mahindra Conveyor systems

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Possible Product Innovation Areas

HEATING AND COOLING

INSULATION

Rationale: About half of a buildings total energy is devoted to

Rationale: Energy-efficient heating can only keep a building warm if

heating, ventilation and air-conditioning (HVAC)

there is sufficient thermal insulation to keep the heat inside.

Air purification, which incorporates technologies such as ultraviolet

light and photo-reactive chemicals similar to those that occur in the
Earth's atmosphere. Such systems enable buildings to reuse large
amounts of their internal air and help lower heating costs.

Insulating concrete forms (ICFs): These use interlocking

polystyrene concrete forms to create a seamless wall through which
air cannot penetrate.

Passive solar and radiant heating, where warm, sunlit air is

diverted to heat a building or, during the summer months, used to
draw in colder air for ventilation. Such passive solar designs are used
in many high-efficiency buildings

LIGHTING
Rationale: lighting eats up energy as well - somewhere between 10
and 30% of a building's total energy consumption.
LEDs: These require about one tenth of the energy of incandescent
light bulbs and roughly half of that of the compact fluorescent lights
(CFLs). They also last at least 40 times longer.
OLEDs(organic light emitting diode): These applications promise
to make a big dent in the amount of energy spent on lighting.
Therefore, these can be one of the product innovations to look into.

Approach to innovation:

Investment in R&D

Structural insulated panels (SIPs): These are frequently used

insulation option, partly because they can be integrated into a number
of materials, including particle and gypsum board, sheet metal,
plastics and foams.
Phase-change materials (PCMs): These absorb or discharge heat
as they change back and forth from a solid to liquid state. In a sense
they "melt" and "freeze"
at conditionsBUILDINGS
close to room temperature and
SELF-POWERED
draw in or release heat in the process.
Rationale: The transition to true green buildings - the realm of netzero-energy construction and beyond - will not be complete until they
produce enough power to cover their own energy requirements and even
send excess energy back into the power grid.
Solar poweris a more widely tested method for buildings to create
renewable energy. Photovoltaic cells are found not only on rooftops but
also on building facades and even in transparent modules used as
windows and skylights.

Wind Energy:
Tall buildings and skyscrapers which has nearly
constant air currents at higher altitudes, turbines can generate a
considerable
portion of ainbuilding'sEarly
ownWarning
power requirements.
Partnerships
with other stakeholders
System for latest
value chain

developments across

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Customer Value Model

Mahindra EPC Services
Energy savings (35%) due to:
o Shading measures (3.4%)
o Proper Window Wall Ratio (2.6%)
o Changing from dark to light color
(0.9%)
o Improved glass (3.5%)
o Polyurethane insulation on walls
and roofs (2.7%)
o Daylight sensors (6%)
o Improved HVAC systems (12.5%)
o On-demand HVAC system (1.3%)
o Heat Recovery systems (1.5%)
Potable water saving of 20-30%

Next Best Alternative

Assumptions

Placeholders

Savings due to water storage

(+)
Enhanced indoor air quality
(+)
Higher productivity of
Benefit
NA
occupants (+)
elements
Enhanced day light and
ventilation (+)
Any company making profit of
more than 5 crores have to give
There is sufficient demand
2% in CSR according to New
from the factories for Green
Company Act. Solar technology
factory solutions
can be helpful to take care of
Finding independent
this 2%. (+)
Vendor Search cost (much
vendors for different
Risk that energy savings
System maintenance cost
higher than in Mahindra
solutions is quite difficult
might not be realized (-)
Cost
EPC services turnkey
Vendor Search cost
than
narrowing
down
on
one
Higher government incentives
elements
solution)
complete solution provider
(+)
Pricing in a normal factory
Better brand image (+)
building construction case
Higher reliability because of
depends on factory size
one-stop solution provider (+)
Less coordination cost
because of just one point of
contact (+)
Payback period might be quite
Price
Depends on factory size
Depends on customization
large
in someconsists
cases (-) of
mainly
elements
Value
Proposition: Benefit elements mainly
comprise of Energy savings and cost element
mainly
High initial setup cost might
reduction in vendor search cost because of one-stop turnkey solution. Thus, Value proposition
tohigh
any
target
require
interest
expense (-)

Better
managerial
expertise
segment should clearly specify the elements: One-stop solution and Value-for-money in terms of energy
(+)

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Pricing Strategy
Competitive parity pricing: This wont work in this scenario because there are no competitors who provide
flexible EPC Services solution hence, pricing an offering using this would be impossible.
Cost plus pricing: (Project cost + risk-free interest rate*cost) can be used to price an offering. This will get a
minimum threshold on the price
Value-based pricing: This will work in this scenario and this will give a maximum threshold on the possible price
on an offering.
Benefit = Energy saving/kWh consumed*price/kWh + Water saving (in l)*cost/litre of potable water
Cost = Maintenance cost/yr
=> Value-in-use (Mahindra EPC) = Energy saving/kWh consumed*price/kWh + Water saving (in l)*cost/litre of
potable water - Maintenance cost/yr Pmax
=> Value-in-use (NBA) = - Vendor Searchcost/project*Projects/yr Pmarket
=> Energy saving/kWh consumed*price/kWh + Water saving (in l)*cost/litre of potable water - Maintenance
cost/yr Pmax = - Extra Vendor Search cost (in status quo contracts)/project*Projects/yr P market
Pmax = Pmarket + Energy saving/kWh consumed*price/kWh + Water saving (in l)*cost/litre of potable
Price between
(Pmin,cost/yr
Pmax); +
Skimming
strategy:
nearer
to quo
Pmax,contracts)/project*Projects/yr
Market penetration
water
- Maintenance
Extra Vendor
Search Price
cost (in
status

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Sales

Sales Model
SALES PROCESS TO BE FOLLOWED
Locating and prospecting for
customers

Pre-Approach

Initiate
Relationshi
p

The sales presentation

Develop
Relationshi
p

The close:
Gaining Customer commitment to
contract
Post-Sale follow-up:
Relationship enhancement activities

sale:

The sales process would involve three stages:

Relationship Initiation
Relationship Development
Relationship Enhancement

The Approach

Handling Objections/Sales
Resistance:
Addressing Customer Concerns

Nature
of
ENTERPRISE SALE

Enhance
Relationship

Green
Factory
construction
contract
involves a long and complex sales cycle. This
requires an extensive investment in time and
relationship for the sale to go through

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Sales

Sales Channel
Sales
Specializa
tion
Direct
Sales
Force
Full Line

Strategic
Accounts

Major
Accounts

New Business
Development(
Hunter)

Existing
Account
Management
(Farmer)

Specialized
Territory
Account
s
Consultative
(hunter)

Energy
Efficienc
y

Water
Manageme
nt

Waste
Manageme
nt

Indoor
Quality

Relationship
(Farmer)

Of the full line accounts, the accounts will be divided into

three segments based on their strategic importance:
Strategic Accounts
Major Accounts
Territory Accounts

The
process
involve three
stages:
Thesales
sales
andwould
distribution
Channel
Relationship
Initiation
The sales and
distribution Channel will be a direct sales
Relationship
force channelDevelopment
Relationship
Enhancement
The sales force
will be divided based on their specialization
of the products
Account Managers: These are the final customer touch
GreenFactory
construction
contract
long full
and turncomplex sales cycle. This requires an extensive investment in time and relationship for
The Full
Line: They
handle involves
accountsa with
points, and will manage specific client accounts to harvest the
the sale key
to go
through
solutions
relationship
Specialized: They handle product specific accounts.
Hunters: They will look for new company accounts
They will assist the full line sales force.
Farmers: They will maintain and look after the
current accounts

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Customer Services
Operation and
maintenance
Preventive:
Routine
checks of the equipments
to prevent outages and
ensure
maximum
availability.
Corrective:
Fast
restoration of normalcy
after the detection of
failures.
Data
storage
and
Relationship
archiving services
Management
Provision of single point
of contacts to the clients
to ensure fast redressal of
issues.
24X7 customer service
facility
Well-versed workforce in
customer
relationship
management

Annual maintenance
contract
Can
be undertaken for
first
2-3 years after
commissioning
and
performance
guarantee
tests.
On one hand it can be a
source
of
revenue
whereas on the other
hand it can guarantee
smooth transition.

Transfer of operational knowhow

Transfer
of
operation
knowledge can be done at two
stages, firstly, during the
project execution clients staffs
can be trained on the operation
intricacies
and
secondly,
periodic training programs can
be launched at a central
location for a pool of clients.

Technological
upgradation
Provision
of technological
upgradation as well as
replacement
of
the
outdated equipments.
Control systems for solar
power system, effluent
treatment system and
rain harvesting system
may require upgradation
with the passage of time

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LEED vs GRIHA Obtaining Certification

Features

LEED rating system

GRIHA rating system

Reputation

Well-established & internationally

renowned. Favored rating system
among the private sector.

Fairly new it needs further

improvement. Specifically, the
material and resource sustainability
criteria are poorly defined and the
energy criteria can be too stringent
for some projects to comply.

Local context

Doesnt work well in local context.

e.g. Doesnt give a lot of weightage to
water conservation which is very
important in Indian context.

Many criteria that make total sense in

the Indian context. Compliance
criteria for worker safety and well
being is one such example.

Financing aspect

Foreign Bankers would understand the

documentation proving reduction
inEnergy & Environmentsafe guards
slightly better as it more or less would
conform to the western standards.

Difficult to receive foreign financing.

Better for which buildings?

Factories requiring international

standards and aesthetics; where FDI
is tied to the project

Residential complexes, small-scale

industries

Number of accredited professionals

710 (as of Apr 2012)

113 (as of Apr 2012)

The solution will be aimed to maximize LEED rating for factories so that the owners can earn
reputation in the industry and support from the Government. It will help them in building brand
image and hence bringing more business to MEPC.

Approach

Development Phase

Launch Phase

Way Forward

Tactical Launch Plan

Market analysis
Market dynamics

Competitive
landscape

Macro-economic
outlook

Regulatory
environment

Internal SWOT

Internal assets /
Technology

Identified strategic risk areas

Summary and conclusions
Market opportunity description

Market entry strategy

Vision and Mission
Objectives
Overall Strategy
Positioning
Value proposition
Brand
Target segments
Strategic directions
Pricing
Brand and communication
Sales and distribution

Products and services

Customer service
Launch phasing

Tactical launch plan

Execution of Market Entry

Approach

Development Phase

Launch Phase

Way Forward

Execution of Market Entry

PHASE 1 - Development Phase
Financial Outlays
Investment should be made in R&D for green product innovation and development
Outlays for innovation in solar solutions, HVAC, rainwater harvesting systems, conductivity materials, green processes, construction equipment
These investments are for long-term competitive advantage

Partnerships
Strategic Partnerships for products whose in-house capabilities is not there
Long term strategic partnerships are for product development in Lighting solutions, High performance glass, reflective materials and solid waste management
solutions
Short term partnerships in rain-water harvesting solutions, HVAC, green design and construction equipment

Sales Force Development

Development of human and technical abilities for handling accounts as per account handling channel model
Development of sales force based on the strategic requirements of various account types i.e. strategic, major and territorial
Development of training programs and incentive schemes for effectiveness of sales force and hiring of TGBC accredited professionals to bring their expertise

Finalization of Product Offerings

Turn Key Package: This would include holistic one stop green factory solution involving energy efficiency , water management, waste management and indoor
quality improvement
Specialized Packages: Through this we would provide independent services and products pertaining to the need of the customer

Leading the way itself - Key tactical Move for MEPC to launch the pilot project for a Mahindra

Group factory.

Why? To give a testimonial to the market of the capability and belief. This will not only build the brand image

Approach

Development Phase

Launch Phase

Way Forward

Phase 2 Launch Phase

Being the Thought Leader in the Green Construction

Launch Campaign
1. Conduct a Trade Show
inviting the major
customers, media and
government
representatives.
Demonstrate the offerings
and teach them about the
benefits of Green
Factories and impact to
the environment.
2. Target advertising using
trade magazines.
3. Align the communication
tone according the
addressed stakeholder
(e.g.
media,
PR client,
Campaign
government, etc.)
1. Calling Press conference
pre-launch and
announcing the Green
construction with a CSR
activity like making a
village self-energy
sufficient using Solar tech
2. Coordinating the activities
as thought leader with
media and government.

Since MEPC will have the first mover advantage in the Green Factory Construction segment, it has the
opportunity to establish itself as the thought leader in the industry. It should exercise its
1. Collaborating with The Indian Green Building Council (IGBC) to create a talent pool for the industry.
i.

LEED Accredited Professionals

ii. IGBC Accredited Professional Exams

2. Contribute to the capability development initiatives

3. Develop or invite independent agencies for benchmarking of projects, collect data on each project
executed, so that more industry knowledge is publicly available as case studies and benchmarks for future
planning of projects and improving upon past performance.

Relationship Development for

accounts

Strategic Accounts: The strategic sales force

would be invested in bringing businesses
from clients with nation-wide presence
Major Accounts: The designated sales force
would look for relationship building with
companies with significant presence
Territorial Accounts: The designated sales
force would look for businesses from clients
having regional presence

Establishing Initial
Feedback Channel

Create channel to receive initial

feedback from different
stakeholders, i.e. clients,
government, media, financers,
local community, etc.

Approach

Development Phase

Launch Phase

Way Forward

Possible Long Term Strategies

Expansion to new geographies
In Country: In long term, Mahindra EPC can expand to states which have low industrial penetration at the moment and
may have the potential in future
South-east Asian Market and worldwide: Mahindra EPC can also look to expand in the green construction segment in
the south-east Asian markets and other nations

Extension of Offerings
In the long term, we will extend our product offerings beyond the factory segment to
Green Schools
Residential and Commercial buildings segment.
Business Parks
We will expand our product portfolio into new product features like wind energy. By this, we will also look for supplying the
surplus power to the grid.

Innovation: Long term

In-house innovation: Incorporation of innovations in product components such as rainwater
harvesting solution, HVAC systems, green designs and construction equipment

THANK YOU!

Appendix

Regulation regarding Renewable Purchase Obligation across target

states
States

Favorable

Neutral/off-putting

Andhra Pradesh

Renewable energy sources means renewable

sources such as Co-generation (from renewable
sources of energy like bagasse).

Renewable energy sources means renewable sources

such as Co-generation (from renewable sources of
energy like bagasse).

The consumption of a Rural Electricity Supply Cooperative Society (RESCO) shall be taken into account
for calculating the consumption of a distribution
licensee for the purpose of these Regulations. There
shall be no separate Renewable Power Purchase
Obligation on the RESCOs.

The consumption of a Rural Electricity Supply Cooperative Society (RESCO) shall be taken into account
for calculating the consumption of a distribution
licensee for the purpose of these Regulations. There
shall be no separate Renewable Power Purchase
Obligation on the RESCOs.

The State Agency shall submit quarterly status to the

Commission in respect of compliance of Renewable
Power Purchase Obligation (RPPO) by the obligated
entity(s)

The State Agency shall submit quarterly status to the

Commission in respect of compliance of Renewable
Power Purchase Obligation (RPPO) by the obligated
entity(s)

The state has set a high Solar RPO target of 1%

which is higher than Tariff policy targets.

The RPO regulations are not applicable on captive as

well as open access consumers.

Average Pooled Power Cost` definition is in line with

the CERC REC Regulation, 2010

As per the regulation the APPC of previous year would

be applicable while determining the cost of power but
in reality GUVNL freezes the APPC for the complete life
projects.

Gujarat

The State Agency shall submit quarterly status to the

Commission in respect of compliance of renewable
purchase obligation by the obligated entities in the
format as stipulated by the Commission.

If the mentioned minimum quantum of power

purchase from solar is not available in a particular year,
then in such cases, additional wind or other energy,
over and above their RPO, shall be utilized for
fulfillment of the solar RPO.

Regulation regarding Renewable Purchase Obligation across target

states
States

Favorable

Neutral/off-putting

Tamil Nadu

The State Agency shall submit quarterly status to

the Commission in respect of compliance of
renewable purchase obligation by the obligated
entities in the format as stipulated by the
Commission.

The state have set a very low solar RPO target for 2012-13 i.e. 0.1%
The RPO targets set under TN Solar Policy 2012 and TNERC are
conflicting to each other.
The state has clarified that purchases made from co-generation units
irrespective of the fuel type would be considered for fulfilling their
RPO.
The APPC defined as per TNERC excludes short term as well as
purchases from liquid fuels for computation of APPC.
Also according to draft amendment published by TNERC, the APPC
should not exceed 75% of

Maharashtra

It is clearly mentioned that eligible renewable

energy sources shall include Non-fossil fuel
(including bagasse) based co-generation projects
(both, qualifying and non-qualifying co-generation
projects)

Procurement of RE power generated within the State by Distribution

Licensee at rate other than rate approved by the State Commission
directly from generator or from trader shall not be considered as
eligible quantum for fulfillment of renewable purchase obligation of
such distribution licensee

The summary statement of RE procurement and

RPO compliance by different Obligated Entities
shall be published by the State Agency on
cumulative basis every month on its website.

Captive user(s) consuming power from grid connected fossil fuel

based co-generation plants, are exempted from applicability of RPO
target and other related conditions as specified in these Regulations.

The State Agency shall submit quarterly status to

the State Commission in respect of compliance of
renewable purchase obligation by the Obligated
Entities

The state has set a RPO target of 0.25% in line with Tariff policy but it
has set a flat target of 0.5% till 2015-16.

Regulation regarding Renewable Purchase Obligation across target

states
States

Favorable

Neutral/off-putting

West Bengal

The regulator has clearly defined RPO target fulfillment

by purchase of power both being originated from cogeneration and/or renewable sources.

The commission in its regulation have defined RPO target

from 2013-14 onwards.

RPO trajectory till 2017-18 is defined.

To meet the RPO the licensee shall make advertisement
in at least two widely published national English daily
newspapers and at least one widely published Bengali
daily newspaper every year.
Average Pooled Power Cost` definition is in line with the
CERC REC Regulation, 2010
Rajasthan

At the end of each financial year, each obligated entity

shall submit a detailed statement regarding total
electricity drawn / consumed and renewable energy /REC
purchased and duly certified by the auditors to the State
agency on or before ensuing 30th September.
Solar RPO target (on DISCOMS only) of 0.75% in 201213 is higher than Tariff policy target.
Each Distribution Licensee shall indicate, along with
sufficient proof thereof, the estimated quantum of
purchase of renewable energy for the ensuing year in
tariff/ARR petition in accordance with Regulations notified
by the Commission

RPO targets till 2017-18 (0.6%) are not sufficient to meet

Tariff policy targets
There is no provision requiring State Agency developing
methodology/reporting to commission regarding RPO
compliance.
The regulation does not specify the min capacity for
Captive consumers for applicability of RPO.
As per, Rajasthan Electricity Regulatory Commission
(Power Purchase & Procurement Process of Distribution
Licensee) (2nd Amendment) Regulations, 2011 solar RPO
in Rajasthan is applicable on DISCOMS only.
RPO targets are till 2013-14 only. A longer trajectory may
be desirable
There is separate RPO for bio-mass and that can be
fulfilled by purchase of power from biomass plant only and
not by purchase of REC.
In case of genuine difficulty in complying with the
renewable power purchase obligation because of nonavailability of renewable energy and/or certificates, the
obligated entity can approach the Commission to carry
forward the compliance requirement to the next year or

Factor for the Enhancement in the Market Value Added