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Finding the right carbon balance

Finding the right carbon balance
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First Published: Mon, Jun 27 2011. 09 21 PM IST

Updated: Mon, Jun 27 2011. 09 21 PM IST
Bangalore : When Abhishek Humbad, 24, and Richa Bajpai bootstrapped their carbon consulting firm NextGen PMS Pvt. Ltd with an initial investment of Rs 25,000 in 2009, they knew that they would be competing against the likes of PricewaterhouseCoopers Llp and Ernst and Young Llp.
A year later, NextGen has scored clients that would make many of the world’s biggest consultants proud. The list includes Intel Corp., Tetra Pak Cheese and Powder Systems Inc., Infosys Ltd, ICICI Bank Ltd, the Reserve Bank of India (RBI), Pidilite Industries Ltd, Royal Challengers Bangalore, IndusInd Bank Ltd and United Breweries Ltd.
For Humbad, who started NextGen when he was a final-year engineering undergraduate, the first hurdle was to convince potential clients that they could do the job.
“If we were to tell a big client what to do, there would be this expectation that we have to have grey hair on our heads,” says Humbad.
Like most tenderfoots breaking into the bastion of established firms, NextGen is playing the low-cost game. “We want to be the IndiGo airlines of carbon accounting,” says Bajpai, “Low cost, on time, and good quality.”
It is a strategy that has worked well. The one-year-old start-up has a revenue of Rs 1.5 crore. “We fall into the small-scale category right now; by next financial year we intend to grow into a medium-size business,” says Bajpai, 24.
NextGen’s first corporate client was Intel, for whom Humbad and Bajpai say they worked for peanuts.
“Back then, we looked at things very differently. If a sum of money would pay two years of our college fee, we thought it was a good price,” says Humbad. But the initial giveaways helped get NextGen the credibility they needed.
The enquiry from Intel had come their way through one of the conferences they had presented at, and they proved themselves by doing a clean job of it.
What exactly does NextGen do? Carbon accounting is the process by which a firm measures its carbon footprint, establishes a baseline, and devises methods to reduce it.
The field is still emerging in India because it is not driven by regulation. India has not adopted the Kyoto Protocol, a set of rules under the United Nations Framework Convention on Climate Change to reduce global warming.
Nevertheless, demand is picking up in response to government incentives such as those under the National Action Plan on Climate Change, 2008, which promotes water-use efficiency, sustainable agriculture,?energy?efficiency and so on.
In 2007, RBI issued a circular to banks to report measures adopted by them to ensure environment- friendly and sustainable development.
“There is demand coming from the client side as well,” says Bajpai, “as sustainability reporting becomes the norm. If an Indian company is (a) big supplier to a giant multinational like Tesco or Walmart, they will have guidelines from them about environmental practices which they need to comply with.”
A typical client engagement would require measuring environmental impact of an organization on a granular, day-to-day basis. Humbad and Bajpai look at everything from energy consumption and diesel consumption to the vintage of vehicles used by a company to determine energy efficiency and emission levels.
Some data, such as electricity bills, is readily available. Others such as emissions from diesel generators need meters and sensors to be installed. “It isn’t a very cost-intensive exercise,” says Bajpai, “You don’t really need fancy instruments. What it needs is a lot of manual monitoring and processes. You don’t get 100% accurate data in the first year, but it gets better as you go along.”
Humbad and Bajpai say their initial knowledge about the industry came entirely through their projects with the World Bank, as well as their own reading.
In addition, they worked a lot with the faculty at institutes such as the Energy and Resources Institute, Indian Institute of Science (IISc), Bangalore, and Central Building Research Institute that helped them stay in touch with the latest developments in the space.
NextGen was initially incubated at Birla Institute of Technology and Science (BITS), Pilani, and later moved to the NS Raghavan Centre for Entrepreneurial Learning at the Indian Institute of Management, Bangalore. Here, too, it received a lot of mentorship.
For all the lack of professional training, Bajpai says NextGen is the only consultant in India accredited by the Carbon Disclosure Project, an international consortium that collects and disseminates global data on, and develops standards for carbon accounting.
But NextGen doesn’t intend to stop at carbon accounting alone. Around Rs 50 lakh of its annual revenue last year came from its biogas plant installations, a technology it developed in collaboration with IISc and BITS, Pilani. “The plant takes all your organic waste and converts it into biogas, which can be used as fuel. Currently, it can operate with two tonnes of waste. If we can scale this up to 10 tonnes, it can be used to generate electricity,” says Bajpai.
NextGen’s plan is to use this technology to power rural telecom towers. “We have a 40% subsidy from the government for capacity expansion in rural areas and are in talks with telecom companies to make it happen. They are very interested,” she says. Setting up biogas plants for rural telecom towers will also encourage village-based entrepreneurs who will be owners of the plants.
The firm, which won a business-plan writing contest, now has 13 employees, excluding Bajpai and Humbad. “Every month we employ a new person and she becomes quickly overloaded.”
There are other ideas, too. NextGen is looking at working with apparel manufacturers to create eco-friendly clothing lines.
It will do this by reducing the carbon footprint across the supply chain—starting from organic methods of growing cotton, to the point where the apparel makes it to the market; the team will devise methods to minimize the carbon footprint.
For now, NextGen is comfortable. Even with a low-cost model, its consulting business still fetches it a 50% margin.
“Consulting drives my bottom line, while biogas will drive revenue,” says Bajpai.
From helping its first non-corporate client, a Ludhiana-based farmer who wanted to measure his carbon footprint in a vermicomposting procedure, to targeting a list of the top 200 Indian firms, NextGen’s clearly made a big leap.
Quick Facts
Company Name
NextGen PMS Pvt. Ltd
Young entrepreneurs working in an emerging field
Abhishek Humbad and Richa Bajpai
Carbon accounting
Product company or services or both
Products and services
Number of founders and employees
Two founders and 13 employees
Investment to date
Rs 25,000
The next closest milestone
By the next fiscal year, NextGen intends to grow into a medium-size business
NextGen was among the finalists of the NEN First Dot Student Startup Showcase.
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First Published: Mon, Jun 27 2011. 09 21 PM IST