120731 ADB India and Sri Lanka Market Scoping Study ANNEXES

7/30/2019 120731 ADB India and Sri Lanka Market Scoping Study ANNEXES

1/40

INCLUSIVE BUSINESS MARKET STUDY

FOR INDIA AND SRI LANKA

FINAL REPORT:ANNEXES

DECEMBER 5,2012


2/40

ADB Inclusive Business Market Study for India and Sri Lanka

Draft Report: Annexes

1

Contents

1 Inclusive businesses surveyed.......................................................................................................... 2

2 List of fund managers interviewed .................................................................................................. 6

3 List of donors interviewed ............................................................................................................... 7

4 Case studies of inclusive businesses ................................................................................................ 8

5 Deep dives on potential fund manager partners for ADB ............................................................. 24

6 Economic factsheet on low-income states .................................................................................... 27

7 Deep dives on priority sectors ....................................................................................................... 32

8 Government schemes relevant to ADBs fund............................................................................. 344


3/40



2

1 INCLUSIVE BUSINESSES SURVEYEDCompany

name

Sector Presence in

LIS/NES/BothBOP Engagement model

C D E S

1Apollo Hospitals

(Reach division)Healthcare

2 3S Shramik - Div. SaraplastWater &

Sanitation

3 Aarusha Homes Pvt. Ltd. Real estate

4 Artisans Micro Finance Retail

5 Babajob.comTelecom, BPO &

IT

6 Bodhicrew Services Pvt. Ltd. Education

7 Carzcare Retail

8 Champion Agro LimitedAgri-business and

agriculture

9 d.light Design Inc.Energy (incl.

renewable)

10 Desicrew Solutions P Ltd.,Telecom, BPO &

IT

11 Desta Retail

12Drishtee Development and

Communication LtdRetail

13 Edubridge Learning Pvt. Ltd. Education

14 EkgaonTelecom, BPO &

IT

15 Eko India Financial ServicesTelecom, BPO &

IT

16 Eram Scientific Solutions Water andsanitation

17 Excellent Renewable Pvt. Ltd. Renewable Energy

18 Does not wish to disclose BFSI

19 Forus Health Pvt. Ltd.Healthcare (non-

pharma)

20 G. V. Meditech Ltd.Healthcare (non-

pharma)

21 Global Easy Water Products

Agri-business and

agriculture (incl.seeds)


4/40



3

Company

name

Sector Presence in


C D E S

22 Glocal Healthcare SystemsHealthcare (non-

pharma)

23Gram Tarang Employability

Training Services Pvt. Ltd.Education

24 Greenlight PlanetEnergy (incl.

renewable)

25 Healthpoint Services IndiaHealthcare (non-

pharma)

26 Hippocampus Learning Centres Education

27 Hotel Saravana BhavanHospitality and

leisure/tourism

28 Industree Crafts Pvt LtdTextiles, garments

and handicrafts

29 InI Farms Pvt. Ltd.

Agri-business and

agriculture (incl.

seeds)

31ITC Limited, Agri Business

Division

Agri-business and

agriculture (incl.

seeds)

32 Jain Irrigation Systems

Agri-business and

agriculture (incl.

seeds)

33 Jaipur Rugs Company Pvt.Textiles, garments

and handicrafts

34 Jayashree IndustriesHealthcare (non-

pharma)

35Jk Paper Ltd, Plantation

activities, Farm Forestry

Agri-business and

agriculture (incl.

seeds)

36 Kanan Devan Hills PlantationsAgri-business andagriculture (incl.

seeds)

37 Lafarge India

Real estate and

construction (incl.

housing)

38 Logistimo IndiaTelecom, BPO &

IT

39 Medplus HealthHealthcare (non-

pharma)

40 Milk Mantra Dairy Pvt LtdAgri-business and

agriculture (incl.


5/40



4

Company

name

Sector Presence in


C D E S

seeds)

41 Mobile WorksTelecom, BPO &IT

42Multi Commodity Exchange of

India, Gramin Suvidha Kendra

Telecom, BPO &

IT

43Piramal Water Pvt. Ltd. (brand

name: Sarvajal)

Water and

sanitation

44 Projects and skill development

departmentEducation

45 Prolific Systems & Technologies

Pvt LtdEducation

46Promethean Power Systems

Energy (incl.

renewable)

47Rangsutra

Textiles, garments

and handicrafts

48Rural Off-grid market

Energy (incl.

renewable)

49 RuralShores Business Services

Pvt. Ltd.

Telecom, BPO &

IT

50 SAVE - Saline Area Vitalization

Enterprise Limited

Agri-business and

agriculture (incl.

seeds)

51 SELCO Solar Light Private

Limited

Energy (incl.

renewable)

52Share

Banking &

financial services

(incl. insurance

and microfinance)

53Shree kamdhenu electronics

Agri-business and

agriculture (incl.

seeds)

54 Shriram transport finance

company limited

Banking &

financial services

(incl. insurance

and microfinance)

55Simpa Networks

Energy (incl.

renewable)

56 Source for Change, Piramal

Foundation

Telecom, BPO &

IT


6/40



5

Company

name

Sector Presence in


C D E S

57Star Agri

Agri-business and

agriculture (incl.

seeds)

58 Swabhimaan Distribution

Services Pvt LtdRetail

59Tata Swach

Water and

sanitation

60Under the mango tree

Agri-business and

agriculture (incl.

seeds)

61Vaatsalya Healthcare

Healthcare (non-

pharma)

62Vortex Engineering

Telecom, BPO &

IT

63 V-Shesh Access Services Private

LimitedEducation

64WaterHealth India

Water and

sanitation

65WaterHealth International Inc.

Water and

sanitation

66 Waterlife India Pvt Ltd Water andsanitation

67Wonder Grass initiative

Real estate and

construction (incl.

housing)

68Zameen Organic

Agri-business and

agriculture (incl.

seeds)

69Ziqitza Health Care Limited

Healthcare (non-

pharma)

SOURCE: Results of survey conducted by Dalberg


7/40



6

2 LIST OF FUND MANAGERS INTERVIEWEDFund manager Interviewee Focus on

IB?1

Sector

focus

Geographic

focus

Stage of

investment

1 Aavishkaar Vineet Rai Yes Agnostic India Early

2 Actis Ritu Kumar No Agnostic EM Growth

3 Acumen Fund (Has now left) Yes Agnostic EM Early

4 Aureos Capital

Nissanka

Weerasekara, Balaji

Srinivas

No (SME) Agnostic EM Growth

5 Bamboo Finance Eric Berkowitz Yes Agnostic India Early

6 Elevar Equity Sandeep Farias Yes Agnostic India Growth

7 Gray Ghost Marc Clayton Hand Yes Agnostic EM Early

8 IIP Varun Sahni Yes Healthcare India Growth

9 Imprint Capital Laura Spiekermann2

Yes Agnostic EM Growth

10 Indo-US Rajesh Raju No IT/ITES India Early

11 Lok Capital Vishal Mehta Yes Agnostic India Early

12 LR GlobalChanaka

WickramasuriyaNo Agnostic Sri Lanka Growth

13 NEA Vamesh Chovatia No Agnostic India Growth

14 Nereus Capital Jonathan Winer No Energy India Growth

15 PragatiNarayan

ShadagopanNo (SME) Agnostic LIS Growth

16 Rabo Equity Rajesh Srivastava Yes Agri. India Growth

17 Samriddh Fund Ananta P. Sarma No (SME) Agnostic LIS Early

18 SEAF Hemendra Mathur Yes Agri. India Growth

19 Song Advisors Has now left Yes Agnostic India Early

20 Zephyr Mukul Gulati No (SME) Agnostic India Growth

21 To be named Indika Hettiarachchi No Agnostic Sri Lanka Growth

SOURCE: Results of interviews conducted by Dalberg

1 Dalbergs assessment of overlap between fund managers current portfolio and ADBs target definition of

inclusive businesses, i.e., any business that engages the poor as consumer, supplier, distributor, or employee;

All fund managers mentioned in the list have some exposure to inclusive businesses, but ones marked Nohave a more indirect approach to targeting IBs.2

Interview confirmed, to be conducted


8/40



7

3 LIST OF DONORS INTERVIEWEDDonor Contact point

1 KfW Rukmini Parthasarathy, Marcus Baer, Florian Arneth

2 Omidyar Network Ashu Sikri

3 DFID Bala Balasubramanian

4 Catamaran Ventures Arjun Narayan

5 SIDA Christina Wedekull

6 SD Tata Trust Sanjiv Phansalkar

7 Swedfund A. K. Nehru

8 IFC Sri Lanka Ehsanul Azim

9 CDC Group Guy Alexander

- NABARD V. Tagat

- SIDBI K. G. Alai


9/40



8

4 CASE STUDIES OF INCLUSIVE BUSINESSESOur team has interviewed 15 businesses that would naturally fit with ADBs mandate of investing in

inclusive businesses. These businesses have delivered or are in a strong position to deliver both

financial and social return.

These case studies present an overview of the business and some key data points around its finances

(when disclosed) and impact achieved till date. More importantly, each case study highlights the

salient features of a companys model of engaging the poor, assesses its potential to create

sustainable impact, and outlines its key challenges to scaling. The case study also reflects on the

companys need for financing, and its preference for a particular financial instrument, if any.

Our sample of case studies covers a breadth of sectors, geographies, and modes of engagement, and

should present a collection of insights that could serve as a head start to developing a pipeline of

potential inclusive business investments in India and Sri Lanka.


10/40



9

Inclusive Business Case Study Aarusha Homes

Affordable housing for migrants and low-income populations

Sector: Housing

Location of operations: Urban centers in South India

Year of establishment: 2007Turnover: $650,000

Extent of BOP engagement: 700 BOP consumers; 95 BOP employees

Background on Business

Aarusha Homes was started to address the lack of affordable housing options in Indias urban areas.

Each year, this problem affects millions of low-income migrants into the countrys major cities, often

forcing them to live in unsafe and unsanitary conditions. Aarusha provides low-cost accommodation

housing to these migrants and low-income individuals in Hyderabad and Bangalore. Aarusha charges

rents starting at INR 2,000 ($40) per person per month.

Mode of BOP EngagementBOP as Consumers

Aarushas primary mode of engagement with the BOP is as consumers of its affordable housing

services. The majority of Aarushas consumers are employees of entry point jobs, such as security

guards and facilities management staff. On average, a typical security guard earns around Rs 30

($0.60) per hour.

BOP as Employees

Aarusha Homes employs over 90 BOP individuals to work in its housing facilities. A portion of these

employees also live in Aarushas facilities, so they are consumers of this service as well.

Impact to date and future growth plansAarusha has served over 700 consumers to date, and employs over 90 BOP individuals.

With operations in two cities currently, Aarusha plans to begin operations in a third city (Chennai)

this year. In addition to providing rooms, the company also plans to add low-cost apartments to its

portfolio of products. This would capture some of the more upmarket value found in housing for

newlywed couples or young families.

Challenges

A key challenge of working in the housing sector in India is the occurrence of corruption. Property

developers often prefer for negotiations to happen off the books and for transactions to be made

in cash. As Aarusha has refused from inception to work under these circumstances, there is a limited

pool of professional developers with whom it could potentially partner.Aarusha has also faced similar problems with state governments. The company had initially

partnered with the government, to provide housing to low-income public workers. They had to

eventually stop the partnership when the government failed to pay them for this service. Aarusha is

still communicating with state officials to receive its due payment, but as they refuse to pay a bribe,

this process is consuming much of the teams efforts.

Source of financing to date and future needs

Aarusha was started with equity from its promoters, and later received $40,000 in equity financing

from Elevar Equity. To finance its working capital needs, however, Aarusha is looking to raise debt,

preferably at concessionary rates.


11/40



10

Inclusive Business Case Study AISECT

Pan-India network of skills training centers for rural youth

Sector: Education (IT and vocational skills training)

Location of operations: Pan-IndiaYear of establishment: 19853

Turnover: Not disclosed

Extent of BOP engagement: 10,000 BOP micro-entrepreneurs; 1,000,000 BOP students


AISECT is primarily engaged in the areas of skill development and training. Having developed the

course content, AISECT operates a franchise model and leverages partnerships with universities,

such as the Indira Gandhi National Open University (IGNOU), as well as central and state government

skill-building organizations, such as the National Skill Development Corporation (NSDC). AISECT

trains its trainers and presents degrees and certificates to students upon completion of their course.

Mode of BOP Engagement

BOP as Consumers

ASIECTs primary consumers are BOP students from semi-rural and rural areas. In fact, 6,000 of its

10,000 centers are located in villages. Interestingly, despite its franchise model, AISECT has adopted

a flexible fee structure that takes agriculture seasons into account. Students may take a course at

one of AISECTs centers and pay the fee when their family has earned money from selling their

harvested crop.

BOP as Distributors

AISECT has franchised its model and standardized processes. In addition to training its vast network

of trainers, an internal team of 60-70 people conducts regular quality checks. The franchisee is

responsible for marketing efforts, and retains 70-80% of the revenue generated.

Impact to date and future growth plans

AISECT currently has 10,000 centers across 27 states and 3 union territories. The National Skill

Development Corporation (NSDC) is aiming to reach 500 million individuals by 2022. As their largest

partner, AISECT plans to grow rapidly through this partnership. Furthermore, the company plans to

enter the higher education rural BPO sectors.

Challenges

Key challenges faced by AISECT include the lack of infrastructure in the states in which it operates,

and an overall shortage of adequately skilled trainers.


AISECTs major partner to date has been the NSDC, which has supported the company with soft

loans (6-8% interest rates) to expand into other states, to meet staffing needs, and to develop

content and improve processes.

AISECT would consider accepting equity investments, however its current priorities are obtaining

new partners and expanding to new geographies.

3AISECT started as an NGO in 1985.


12/40



11

Inclusive Business Case Study Aitken Spence Hotels

Chain of inclusive hotels in India and Sri Lanka

Sector: Tourism, Hospitality

Location of operations: Pan-Asia

Year of establishment: 2004Turnover: $2 million

Extent of BOP engagement: 7.2 million BOP consumers


A subsidiary of the Sri Lankan-based Aitken Spence conglomerate, Aitken Spence Hotels currently

operates a chain of 24 hotels and resorts in Sri Lanka, the Maldives, India and Oman.


BOP as Suppliers

Though it may be easier to supply inputs from larger suppliers, Aitken Spence purposefully partners

with local farmers to supply its resorts with agricultural produce. In order to ensure certain qualitystandards of its inputs, Aitken Spence trains local farmers on optimal management and preservation

of their produce. In addition, it provides them with the tools they may require, such as seeds,

fertilizer and crates.

BOP as Employees

Aitken Spence directly employs more than 2,000 local BOP individuals to work in its resorts as

facilities management staff, kitchen staff, and tour guides. The company absorbs local high school

graduates into its hotels, guaranteeing them a career path and steady income.


Though it may be easier to engage with more established and standardized suppliers of agriculturalproduce, energy and other inputs that are crucial to the operation of hotels, Aitken Spence has

purposefully chosen to engage the BOP communities in its areas of operation, thereby giving them

the opportunity to benefit as much as possible from the resorts presence.

Challenges

Like many other businesses in Sri Lanka, Aiken Spence is currently challenged with the high costs of

capital, preventing it from growing faster. Though foreign investors have expressed an interest in

the company, they prefer investment timelines that are not long enough to allow for returns (5 years

as opposed to the 8-10 years required to experience returns on investment).

Furthermore, the Sri Lankan government has not been investing adequately in the infrastructure

needed to accommodate the growing tourism industry.


As it is a subsidiary of one of Sri Lankas largest conglomerates, A itken Spence has benefited from

substantial internal reserves, and the ability to leverage its reputation to form joint ventures with

international partners.

The current cost of capital, however, is hindering Aitken Spences expansion plans, for which it

would seek loans at concessionary rates (6-8%). Given that a typical 500-room hotel costs

approximately $40 million to construct, Aitken Spence would look to receive investments between

$10 to $20 million.


13/40



12

Inclusive Business Case Study Apollo REACH

Chain of super-specialty hospitals in rural and semi-urban areas

Sector: Healthcare

Location of operations: Pan-India

Year of establishment: 2008Turnover: $2.4 million

Extent of BOP engagement: 5,000+ BOP customers


Apollo Hospitals Group has owned and managed a network of hospitals and medical facilities in India

since 1979. In 2008, the Group launched a network of smaller satellite facilities, called Apollo REACH

Hospitals. Operating in underserved regions and offering super-specialty medical care at affordable

rates to people living at the BOP, Apollo REACH now manages 3 hospitals in rural and semi-urban

areas.


Apollo REACH, like most healthcare organisations, serves the BOP as consumers, increasing their

access to healthcare services. These consumers currently have to travel to cities for specialty

healthcare. Due to this additional step in the value chain, many patients remain untreated in the

villages. Apollo REACH attempts to bridge this gap. Each hospital houses 150-200 beds, 40 intensive

care unit beds, and 5 operation theatres. Each hospital also offers super-specialty medical services

(e.g., cardiology, orthopedics, neurosurgery, etc).


Apollo REACH has developed a model for establishing hospitals in rural or semi-urban areas that is

significantly more cost efficient than traditional urban hospitals. As a result, REACH hospitals cancharge 20-30% less than other major hospitals. One of the biggest drivers of Apollo REACHs

geographic expansion is additionality, since they would not enter areas where there are other similar

hospitals, or would offer services that other hospitals do not.

Apollo REACH plans to expand to 25 facilities in the next 2-3 years. Apollo REACH plans to grow its

revenues by over 20% annually. By leveraging a hub-and-spoke model, Apollo REACH has effectively

countered the challenge of limited talent in rural areas. Apollos plans for geographic expansion will

be centered around their established hospitals in major cities, to build in the flexibility of temporarily

shifting doctors from the cities to the villages on a needs basis.

Challenges

Scalability is Apollo REACHs major challenge. At the facility level, after reaching the saturation pointin terms of revenues, an increase infrastructure is required, i.e., increasing the number of beds. At

the chain or network level, the challenges are similar to those of other businesses lack of skilled

personnel, high CAPEX, and heavy burden of expensive debt.


Till date, Apollo REACH has been funded by equity from Apollo Hospitals and IFC.

Each hospital costs approximately $5 million to establish, implying that the initiative will need close

to $75 million in investment in the next 3 years. Of the total pool of investments coming in, Apollo

REACH would prefer 60% as debt, 25% as grants, and the remainder as soft loans with a 15 year

tenor.

Company logo


14/40



13

Inclusive Business Case Study CIC Agri

Seed-to-shelf agricultural production company

Sector: Agriculture

Location of operations: Pan-Sri Lanka


Extent of BOP engagement: Over 20,000 BOP farmers


A subsidiary of one of Sri Lankas largest conglomerates, CIC Holdings, CIC Agri is a large agricultural

production company. It contributes to 6% of Sri Lankas overall agriculture-related GDP.


BOP as Suppliers

CIC Agri engages over 20,000 BOP farmers as suppliers of several agricultural products. These are

smallholder farmers, with less than 1 hectare of land. CIC Agri provides these suppliers withagricultural inputs (including seeds and fertilizer), and then buys the harvested product back from

the farmers at fair prices.

BOP as Employees

CIC Agri directly employs approximately 2,500 BOP individuals in its factories, processing units and

farms. Furthermore, it indirectly employs over 2,000 contracted employees.

BOP as Consumers

CIC Agris farmers are also consumers of its consultancy services, through which it advises its farmers

on how to optimize their yields and productivity.


CIC Agri directly impacts the lives of over 20,000 farmers, by guaranteeing them the highest possible

income for their crop. Farmers benefit from a guaranteed, fair income, and extension services on

how to improve the quality of their crop. Currently contributing to 6% of Sri Lankas total agricultural

production, CIC Agris impact on its supplier farmers is very significant and sustainable. It plans to

grow by 20% every year.

Challenges

Like many other businesses in Sri Lanka, CIC Agri is currently facing difficulties in obtaining affordable

financing. Furthermore, Sri Lankan agriculture faces a productivity problem. The productivity of

individual farmers is not optimal, and improving this requires a significant resources, to both educatefarmers in optimal farm management, and to invest in the necessary technology (such as machinery,

fertilizer, seeds, etc).


As a private subsidiary of a public holding company, CIC Agri has grown to date with its parent

companys internal reserves, loans from local banks and an equity investment by an Indian company

Due to its relationship with its parent company, CIC Agri would consider an equity investment with

caution. It would consider, however, commercial private equity investments from foreign investors.


15/40



14

Inclusive Business Case Study DesiCrew Solutions

Rural Business Process Outsourcing (BPOs)

Sector: Business Process Outsourcing (BPO), IT


Year of establishment: 2007Turnover: $700,000

Extent of BOP engagement: 200 BOP employees


DesiCrew Solutions was started to bring white collar jobs to rural youth in India. As a Business

Process Outsourcing (BPO) company with 4 centers across Karnataka and Tamil Nadu, DesiCrew

creates attractive rural employment opportunities, thereby reducing the migration of educated

youth to urban areas. DesiCrews headquarter office receives orders from its corporate clients,

which are then assigned to one its 4 rural BPO centers, where the service is delivered. Desicrews

clients include domestic and international clients. Their early supporters include Infosys and HDFC

Life Insurance.


BOP as Employees

DesiCrews primary mode of engaging the BOP is as employees in its BPO centers. These employees

are originally from the surrounding rural areas, and are university-educated. They would previously

have had little choice but to migrate to nearby urban centers for skilled jobs offering a certain salary.

With the presence of Desicrew, however, they are able to stay closer to home and support their

families. Once hired, employees are trained in specific processes and IT skills.


Desicrew currently operates 4 BPO centers in Karnataka and Tamil Nadu, which altogether employ

approximately 200 people. Given DesiCrews transparent career path, employees can stay close to

home without having to sacrifice a fulfilling career. DesiCrew also has a positive impact on its

employees sense of personal satisfaction. When asked what they enjoy about their job, employees

point to the opportunity to manage small teams and directly engage with international clients.

At the community level, DesiCrews centers reduce the migration of educated and talented youth

away from rural areas and into large cities.

Challenges

A key challenge faced by DesiCrew is the need to keep costs low and standardized across its 4

centers. This would not only lead to greater profitability, but it would allow any order to be assignedto any of its BPO centers. Keeping its costs low is critical for DesiCrew to remain competitive in the

BPO market.


DesiCrew was incubated at the Rural Technology and Business Incubator (RTBI), associated with the

Indian Institute of Technology in Madras (IITM). As a result, it received seed funding of $10,000, and

then secured an interest-free loan from Villgro (another social incubator based in South India).

DesiCrew has since raised equity funding from an Indian venture capital fund.

Though it is currently able to receive raise debt against receivables to finance its working capital

needs, DesiCrew would look to raise equity in the future, to further scale its business.


16/40



15

Inclusive Business Case Study Global Easy Water Products

Affordable drip-irrigation technology for smallholder farmers

Sector: Agriculture



Extent of BOP engagement: 41,000 BOP consumers


Started as a for-profit subsidiary of International Development Enterprises India (IDEI), Global Easy

Water Products (GEWP), sells affordable drip irrigation technology to smallholder farmers across

India.


BOP as Suppliers

Though it may be easier to supply inputs from larger suppliers, Aitken Spence purposefully partnerswith local farmers to supply its resorts with agricultural produce. In order to ensure certain quality

standards of its inputs, Aitken Spence trains local farmers on optimal management and preservation

of their produce. In addition, it provides them with the tools they may require, such as seeds,

fertilizer and crates.

BOP as Employees

Aitken Spence directly employs more than 2,000 local BOP individuals to work in its resorts as

facilities management staff, kitchen staff, and tour guides. The company absorbs local high school

graduates into its hotels, guaranteeing them a career path and steady income.

Impact to date and future growth plansThough it may be easier to engage with more established and standardized suppliers of agricultural

produce, energy and other inputs that are crucial to the operation of hotels, Aitken Spence has

purposefully chosen to engage the BOP communities in its areas of operation, thereby giving them

the opportunity to benefit as much as possible from the resorts presence.

Challenges

Like many other businesses in Sri Lanka, Aiken Spence is currently challenged with the high costs of

capital, preventing it from growing faster. Though foreign investors have expressed an interest in

the company, they prefer investment timelines that are not long enough to allow for returns (5 years

as opposed to the 8-10 years required to experience returns on investment).

Furthermore, the Sri Lankan government has not been investing adequately in the infrastructure

needed to accommodate the growing tourism industry.


As it is a subsidiary of one of Sri Lankas largest conglomerates, Aitken Spence has benefited from

substantial internal reserves, and the ability to leverage its reputation to form joint ventures with

international partners.

The current cost of capital, however, is hindering Aitken Spences expansion plans, for which it

would seek loans at concessionary rates (6-8%). Given that a typical 500-room hotel costs

approximately $40 million to construct, Aitken Spence would look to receive investments between

$10 to $20 million.


17/40



16

Inclusive Business Case Study Greenlight Planet

Off-grid solar lighting products for rural consumers

Sector: Energy(renewable)


Year of establishment: 2008Turnover: Not disclosed

Extent of BOP engagement: 230 employees; 1,000 distributors; 1,000,000 consumers


Greenlight Planet sells affordable off-grid solar lighting products to BOP consumers in India and East

Africa. Their products include an award-winning Sun King lamp, priced at $17 (Rs. 850), and a Sun

King Pro for $32 (Rs. 1,600), the latter of which includes a mobile phone charger. Greenlight

currently has operations in 4 states in India (Bihar, Maharashtra, Odisha, Uttar Pradesh) and in

Kenya.

Mode of BOP EngagementBOP as Distributors

Partly due to the high costs associated with using existing distribution channels, Greenlight Planet

has created an innovative, decentralized distribution network that directly serves BOP populations.

Village-level entrepreneurs, Sun King Saathis, are recruited and trained by Greenlight district

managers and team leaders. Distributors are responsible for educating consumers on the benefits of

using solar lights.

Greenlight has found that successful distributors are not involved in any other entrepreneurial

activities, which ensures that they are motivated by the sales commission to maximize sales. Further,

they should be local, trusted and credit within the local community.

BOP as EmployeesGreenlights team leaders and district managers are village-based, and also belong to the BOP.

BOP as Consumers

Greenlights target consumers are BOP, rural populations with no or limited access to grid electricity.


Greenlight Planet generates impact on multiple levels. Customers have access to a reliable source of

clean energy, allowing them to be more productive during hours when there is no sunlight, and

reducing the environmental, health and safety risks of being dependent on kerosene lamps. For its

distributors and employees, Greenlight is generating increased income levels, and training them in

very relevant and useful entrepreneurial skills.

Greenlight plans to reach 10 million customers through 10,000 distributors by 2015.

Challenges

Greenlight Planet has been unable to access affordable, local working capital to finance its inventory.


Greenlights primary source of funding has been a $4 million Series A equity investment from its

angel funder and Bamboo Finance, a venture capital fund. In addition, it has received $250,000 in

debt funding from Deutsche Bank, the Lemelson Foundation and Ashoka.

Greenlight Planet would need $5-10 million in future financing, the ideal composition of which

would be 20% equity, 70% debt and 10% grant funding.


18/40



17

Inclusive Business Case Study Industree Crafts Pvt. Ltd.Retailing handicrafts produced by rural artisans

Sector: Manufacture and retail

Location of operations: Pan-India, Asia


Extent of BOP engagement: 3,360 suppliers


Industree Crafts works with rural artisans and self-help groups (SHGs) to produce textiles, garments

and other handicrafts, which it retails under the Mother Earth brand across India. Based in a

desire to enable rural entrepreneurs, Industree creates new supply chains and retail channels,

connecting rural artisans to urban consumers. Though this model is not as efficient or lucrative as

sourcing products from factories, Industree prioritizes an improvement in livelihood opportunities

for the rural BOP.


BOP as Suppliers

Industree engages BOP suppliers as part of its core business operations. It assists in the formation of

SHGs and organizes rural artisans into cooperatives and associations. Industree then provides

collateral to these SHGs and acts as a guarantor for bank loans.

Almost 100% of the fabric used in Industrees products and 40% of all products made come from

SHGs.

As Industree expands, it also invests in supply chain infrastructure to facilitate collection of its

products from remote areas. Through its Foundation, the company identifies and creates new

"handicraft clusters, and invests heavily in training for quality and consistency. The companysupports the Foundation in financial and non-financial ways.


Industree currently works with 18 SHGs and 300 handicraft clusters across 9 states in India,

representing over 3,300 rural suppliers in total. By turning traditional art into aspirational lifestyle

products, Industree has improved the livelihood opportunities of thousands of rural individuals, and

has promoted entrepreneurship among its BOP suppliers.

Over the next three years, the company intends to work with 10,000 suppliers across the country.

Industree has aggressive growth plans and has recently started exporting to European markets.

ChallengesPrimary challenges faced by Industree include poor infrastructure in the states in which it operates,

the low availability of adequately skilled labour, and an unsupportive regulatory framework for early

stage companies in India.


In 2011, Industree received a $1 million equity investment from Grassroots Business Fund. The

company has also received a $200,000 technical assistance grant to be used towards customer care

training and brand building.

For their next round of fundraising, Industree will look to raise a further $6-7 million, largely in the

form of equity.


19/40



18

Inclusive Business Case Study Jaipur Rugs

Hand-knotted carpets made by rural artisan women

Sector: Handicrafts



Extent of BOP engagement: 40,000 suppliers (weavers), 200 employees


Based in Rajasthan, India, Jaipur Rugs is a manufacturer of hand-knotted carpets. Jaipur Rugs directly

engages with a network of over 40,000 rural artisan weavers to make its carpets, which are then

exported to countries around the world.


BOP as Suppliers

Jaipur Rugs main mode of engaging the BOP is as suppliers. The company indirectly employs morethan 40,000 rural artisans to make its hand-woven carpets, which are then exported to over 30

countries around the world. Raw materials to make the carpets are provided directly to the carpet

weavers, along with design patterns and specifications. Carpet weavers make the carpets in their

homes, where they have looms, and the finished product is delivered back to the companys

headquarters. Each weaver is paid per square foot of carpet made.

BOP as Employees

In addition, Jaipur Rugs employs more than 200 full-time employees, most of whom are also from

low-income backgrounds. Though educated, these employees have been trained extensively to work

with advanced technological tools and to develop a valuable design-related skillset. At Jaipur Rugs,

these employees have been encouraged to take on more responsibility and to develop theirprofessional skills much more than they would have experienced in a more traditional company.


Jaipur Rugs has reached a network of more than 40,000 rural artisans across 6 states. It expects this

number to grow to 50,000 artisans within 3 years time. Its full-time employees will also grow, by

50% to a total of 300. In addition to providing these weavers with employment and a steady source

of income, working with Jaipur Rugs gives women greater autonomy within the household.

Challenges

With its very extensive network of rural artisans, Jaipur Rugs model requires significant logistical

organization to work efficiently. A continuous question asked by the companys management is howto further increase its operations and efficiency.

Furthermore, as significant resources are dedicated to skills training for the companys weavers, a

challenge has been to find the right partners that could develop literacy and entrepreneurial skills

among its weavers.


Started with internal reserves, Jaipur Rugs received a $1 million investment from the Grassroots

Business Fund. When considering future investors, Jaipur Rugs is conscious of partnering with

investors who have similar social priorities.


20/40



19

Inclusive Business Case Study MAS Intimates

Innovative manufacturer of intimate apparel and sportswear

Sector: Apparel, Textiles

Location of operations: Pan-Asia


Extent of BOP engagement: 40,000 employees


Located in Sri Lanka, MAS Intimates is the regions leading manufacturer of intimate wear and

sportswear. It is the preferred supplier of apparel to global brands, such as Victorias Secret, Nike,

Calvin Klein, Ann Taylor, Speedo and Gap. A subsidiary of MAS Holdings, MAS Intimates employs

more than 50,000 youth from BOP backgrounds across Sri Lanka.


BOP as EmployeesMAS Intimates employs more than 50,000 individuals from BOP backgrounds, 80% of whom are

women. The majority of employees are from rural and semi-urban areas. They are often recruited to

work at MAS with minimal previous work experience and are trained in the skills required for their

position.


MAS Holdings currently operates 34 facilities in Sri Lanka, and 1 in India. When the company

started, it solely focused on manufacturing apparel for its clients. Since then, however, MAS has

captured increasing value along the entire production chain. The company now also produces

accessories, such as elastics, and lace, and manufactures textiles. Furthermore, it has also started its

own lingerie brand, calledAmante, whose products are currently sold exclusively in India.

MAS impact on its employees is multifold. In addition to the technical skills and steady source of

income gained by employees at MAS, the company strongly encourages the development of general

professional and life skills. Employees are encouraged to proactively think about their career

paths within the organization, and to pursue their interests, whether or not they are related to MAS.

To promote ownership and critical thinking among employees, small teams of workers have weekly

meetings to discuss how any challenges faced along the production line can be mitigated.

Challenges

A continuous yet relatively trivial challenge faced by MAS Intimates is the attrition of its employees.

Given Sri Lankas tight labour market and the presence of equally lucrative alt ernative job

opportunities, MAS workers are sometimes attracted to a more traditional office job. Attrition isan issue for the apparel sector as a whole, however, and given MAS very strong reputation as a

preferred employer, this problem is not very acute.

Another challenge is related to continuously maximizing efficiency. The pressure to minimize costs of

production as much as possible has become especially acute, as Western economies contract.


From its start in 1986 with just a few sewing machines, MAS has grown into one of Sri Lankas largest

conglomerates. It has grown with a combination of internal capital reserves, and several joint

ventures with American and European companies.


21/40



20

Inclusive Business Case Study Shree Kamdhenu

Electronics Pvt. Ltd.

Technological products and solutions for dairy collectives

Sector: Information TechnologyLocation of operations: Pan-India, Asia

Year of establishment: 1996

Turnover: $1.3 million

Extent of BOP engagement: 40 BOP employees; 1.05 million BOP consumers


Started in Gujarat in 1996, Shree Kamdhenus product,Akashganga, addresses two core issues faced

by rural dairy farmers: accurately measuring the quantity of milk supplied by farmers to dairy

collectives; and determining the quality of milk supplied.


Shree Kamdhenu Electronics sells its microprocessor-based electronic measurement and quality

testing products to dairy farmer collectives. These innovative tools allow each farmers milk to be

measured for quantity and quality individually, making the entire process of milk collection

transparent and efficient. Earlier, milk from all the farmers was first collected into one container,

and then tested for quality. Farmers were therefore receiving a price for the quality of the

collectives milk, which offered no incentive for individual farmers to improve their own quality.

BOP as Employees

Over 50% of all people employed by Shree Kamdhenu Electronics belong to the BOP population.


With over 3,500 installations in 12 states across India, Akashganga has directly impacted over 1

million farmers and indirectly impacted over 4 million individuals to date. This product directly

impacts the lives of dairy farmers by ensuring that they are paid accurately for the quantity and

quality of milk they individually supply. Due to this and reduced wastage at the collection point,

farmers are getting a higher price for their produce, and have an incentive to supply better quality of

milk. The company plans to reach 1.2 million farmers and 100 BOP employees by 2015.

Challenges

A key challenge for Shree Kamdhenu Electronics has been raising debt, given the difficulties faced by

small businesses in India in securing affordable bank loans.At an operational level, the company also faces the challenges of operating in states with poor

infrastructure, the lack of an enabling business environment for early-stage companies, and at times,

a low willingness from customers to pay for their product.


Shree Kamdhenu Electronics has raised $190,000 as an equity investment from Aavishkar and

Grassroots Business Fund, $113,000 as debt, $95,000 in credit guarantees, and $10,000 as

promoters equity. Ideal future financing would take the form of soft loans and would be utilized for

launching new products for the dairy sector, building a factory and expanding sales across India.


22/40



21

Inclusive Business Case Study StarAgri

Integrated post-harvest management solutions for smallholder farmers

Sector: Agri-business


Year of establishment: 2006Turnover: 300 Million INR ($5.7 Million)

Extent of BOP engagement: 500 BOP employees; 50,000 BOP farmers


StarAgri was started to address Indias vast, unorganized agricultural supply chain. It offers a host of

integrated post-harvest management services, allowing BOP farmers to derive more value from their

harvests. StarAgri directly engages with BOP farmers as well as corporates and processing

companies.


BOP as ConsumersStarAgri provides several services to BOP farmers, including warehousing, quality testing, and

collateral management services. The company also partners with several banks, enabling small-

holder farmers to receive low-cost loans. Upon storing their produce in StarAgri warehouses,

farmers are provided with a receipt, which is recognized by a wide range of banks (established

partners of StarAgri) as collateral.

BOP as Suppliers

Upon receiving orders for farm produce from Indian corporates, StarAgri procures this produce

directly from thousands of rural farmers. By removing middlemen from the process, StarAgris

farmers receive a higher price for their produce. Futhermore, StarAgris quality-based procurement

allows farmers to receive higher prices for high-quality produce (as opposed to traditional auctionsystems, where all farmers receive the same price per crop, regardless of quality).


With 750 warehouses spread across 10 states, Staragri has served more than 50,000 farmers to date,

and currently employs more than 500 people. It plans to reach 2.5 million farmers in the next 5

years. StarAgris range of integrated services allows farmers to exercise greater ownership over

value they earn from their produce. Previously, farmers had little choice but to accept the non-

transparent prices offered to them by supply chain middlemen. With StarAgri, farmers are able to

verify the quality of, and receive fair prices for, their produce. Furthermore, with its warehousing

facilities, farmers can store and better manage their produce and sell it when the market is offering

an optimal price.

Challenges

Initially, StarAgri had faced resistance from banks to recognise the warehouse receipts it would issue

to farmers, in return for affordable loans. As the number of its farmers grew into the thousands,

however, banks became interested. Another challenge is the need to educate farmers on the

advantages of engaging with StartAgri to manage their produce, which requires significant company

resources.


StarAgris launch was financed by its promoters equity totaling $2 million, and it has recently

received an investment of $30 million from IDFC, one of Indias leading infrastructure financingcompanies. In terms of working capital, however, it would look to raise $10-20 million in debt.


23/40



22

Inclusive Business Case Study Vortex Engineering

Low-power and solar-powered ATMsfor rural populations

Sector: Manufacturing, Financial Services

Location of operations: Pan-India, Asia, Africa


Extent of BOP engagement: 7.2 million BOP consumers


Vortex has designed a rugged ATM specifically for rural areas, which are characterized by

intermittent power supplies. Vortexs innovative ATMs consume 90% less power than traditional

ATMs, and can therefore be solar-powered. Due to the subsequent lower costs of operation, these

ATMs can be financially viable with fewer transactions, and therefore are very suitable for

deployment in rural areas.

Vortex sells its ATMs directly to banks, which can then extend their financial services to rural

populations. Its clients include both public and private banks.


BOP as Consumers

Though Vortexs direct consumers are banks, the end beneficiaries of its ATMs are rural BOP

populations, who gain increased access to formal financial services. The majority of rural populations

in India live several kilometers away from the nearest bank branch, often requiring half a day of

travel to conduct financial transactions.


To date, Vortexs ATMs have increased access to financial services for approximately 7.2 million rural

consumers across India, including its lowest income states. The presence of ATM machines in rural

areas has a very significant impact on BOP consumers, including reduced time and money spent

travelling to the nearest banking center. Furthermore, more accessible ATMs lead to an increase in

rural savings.

In addition to India, Vortexs ATMs have been exported to other countries, including Nepal,

Bangladesh and the United Arab Emirates. Over the next 3 years, the company aims to reach 50

million consumers.

Challenges

The key challenge faced by Vortex is the initial reluctance by banks to adopt this innovative ATM.

Despite its design being very suitable for Indian rural areas, some banks view the product as too riskyand continue purchasing the more expensive but less appropriate ATMs from larger manufacturers.


Vortex was incubated at the Rural Technology and Business Incubator (RTBI), associated with the

Indian Institute of Technology, in Madras (IITM), where it received seed funding. Since then, Vortex

has successfully raised more than $12 million from various investors, including the IFC, Bamboo

Finance, Aavishkaar, Ventureast, and Tata Capital.

To fund the expansion of its business, Vortex would look to raise an additional $5 to $10 million. If

made available, it would devote technical assistance funds towards further research and

development.


24/40



23

Inclusive Business Case Study WaterHealth

Affordable housing for migrants and low-income populations

Sector: Water

Location of operations: Andhra Pradesh


Extent of BOP engagement: 5 million BOP consumers, 10 distributors, 600 employees


WaterHealth combines the use of decentralized purification centers in partnership with local

communities to create a scalable and sustainable solution for processing healthy drinking water.

Through its solution, WaterHealth provides each person with up to 20 litres of safe drinking water

per person per day, at an investment of approximately $10 per person.


BOP as ConsumersWaterHealths primary mode of engagement with the BOP is as consumers of its affordable safe

drinking water solution. Beneficiaries of WaterHealths services would otherwise only boil water,

which doesnt remove any inorganic impurities.

BOP as distributors

WaterHealth engages village level entrepreneurs in a build-operate-transfer model, working closely

with the community. In the operate phase, the company engages locals who are often a part of

the BOP themselves to run the plant on a daily basis.

BOP as Employees

WaterHealth builds plants sustainably, by engaging the local population as construction workers.


WaterHealth is currently focused on building its presence in Africa, with the intention of building 25-

30 plants this year. Similarly, the company plans to expand to 300-400 plants in India. Within India,

WaterHealths corridor of interest extends from Rajasthan, Gujarat, Chhattisgarh, Andhra Pradesh

and Karnataka. WaterHealths expansion plans will remain in concentric circles, seen to be the most

effective model of geographic expansion.

Challenges

A key challenge for WaterHealth is competition from subsidized sources of water, and resulting

challenges with pricing. Government has adopted the approach of subsidizing water utilities. As aresult, these utilities lose money and their quality progressively deteriorates. Generating awareness

among consumers that have been spoiled by traditional water utilities in case they exist has also

been a major challenge.


Tata capital, IFC, and other strategic investors have taken equity positions in WaterHealth. The

company has a long line of credit from IFC at low rates of interest.

Given WaterHealths ambitious expansion plans, it will need a large amount of investment. It would

prefer most of its investments as grants, but is open to equity investment as well.


25/40



24

5 DEEP DIVES ON POTENTIAL FUND MANAGER PARTNERS FOR ADBFigure 1: Fund manager snapshot Pragati India Fund

Figure 2: Fund manager snapshot Aavishkaar

Fund name Pragati India Fund I

Investors CDC, IFC

Vintage 2011

Total AUM $ 60 million

Avg. size of investment $ 6 10 million

Target IRR 25% +

Geographic focus Low-incomestates in India

Sector focus Sector agnostic

Social impact metrics employed

Pragati is a relatively recent financial-first, commercial fund and does not have explicit impact measurement systems. Since DFIs such as CDC

and IFC are LPs of the fund, Pragati follows strong ESG-oriented metrics.

StrategyFund details

Pragati believes the market for financing small-medium sized

enterprises in low-income states in India presents attractive financial

opportunities for private equity. Pragati underwrites companies for

being SMEs and not inclusive businesses, but it indirectly engages the

poor by investing in businesses that exist in deprived regions, employ

local populations, and invest in workforce developmentthus having

the potential for significant livel ihood creation. Although finding such

fundable opportunities remains a challenge in these geographies,

Pragati believes being close to the ground will generate strong deal

flow. To further address the risk of limited deal flow, Pragati chooses

to remain sector agnostic. The fund expects their investees to be

family run businesses, and look for strong corporate governance.

Key contact

N. Shadagopan

Sample

investment

JashEngineeringMfg. of equipment used in waste water treatment

SOURCE: Interview with fund; Dalberg research

Fund name Aavishkaar India Micro Venture Capital Fund

Investors CDC, IFC, FMO, KfW, NABARD, Rockefeller, others

Vintage 2005

Total AUM $ 120 million

Avg. size of investment $ 0.1 1 million

Target IRR 20-22%

Geographic focus Pan-India



Several DFIs such as IFC, CDC, FMO, and KfW have invested in Aavishkaar; they expect regular reporting on ESG issues and private sector

development impact across its investments. However, Aavishkaars impact measurement systems are not based on GIIRS.


Aavishkaar was one of the first funds set up to provide equity finance

to early-stage inclusive businesses. The fund diversifies its exposure

across education, healthcare, agriculture, ICT, and energy. Although

Aavishkaar does not focus exclusively on low-income states, its

strategy of investing in rural areas where few other fund managers

are willing to go, ensures that over 50% of its invested capital has a

footprint on low-income states. Aavishkaar takes a venture-capital

style approach to develop sectors and industries in nascent

geographies. Aavishkaar has so far made 33 investments in pre-revenue companies, underwriting risks of limited experience of

entrepreneurs and lack of local enabling institutions, and has still

delivered strong financial returns.

Key contact

Vineet Rai

Sample

investmentVortex EngineeringDeveloper and mfg. of low-cost ATMs

SOURCE: Interview with fund; Dalberg re search; ImpactBase


26/40



25

Figure 3: Fund manager snapshot Aureos

Figure 4: Fund manager snapshot LR Global

Fund name Aureos South Asia Fund

Investors CDC, ADB, Norfund, FMO

Vintage 2004

Total AUM $ 100 million (70% for India)


Target IRR ~25%

Geographic focus India, Sri Lanka, Bangladesh



Aureoshas a proprietary impact measurements framework, the Aureos Sustainability Index. Beyond this, Aureos also follows IFC performance

standards and is a signatory of UNPRI.


Aureos is a global investment firm with a portfolio of emerging

markets focused private equity funds. Aureos qualifies itself as a

financial-first fund manager, and focuses on SMEs across sectors. It is

one of the few fund managers currently focusing on Sri Lanka, and has

a strong track record of investing across South Asia. Although sector

agnostic, the fund plans to target infrastructure oriented sectors such

as manufacturing, transportation / logistics, pharmaceutical, and

healthcare in the short-medium term. Aureos follows ESG criteria

closely, and often uses such parameters as screening criteria, in

conjunction with capital intensity and level of regulation. Globally,

Aureos has completed over 270 transactions to date, and its exits

have realized IRRs of 30%.

Key contact

Balaji Srinivas (India), Nissanka Weerasekara (Sri Lanka)

Sample

investmentAsiri HospitalsChain of low-cost hospitals in Sri Lanka


Fund name LR Global

Investors CDC, ADB, Norfund, FMO

Vintage 2012

Total AUM $ 30 million +

Avg. size of investment $ 0.5 4 million

Target IRR 20-25%

Geographic focus Sri Lanka



ESG is an important part of LR Globals investment strategy, especially given that they are targeting DFIs as their primary LPs. The fund

manager does not currently employ any other impact metrics.


Key contact

Chanaka Wickramasuriya

Sampleinvestment N/A


LR Global, the first formal institutional PE fund to be set up in Sri

Lanka in the current post-conflict environment, was spun out of the

Rockefeller office by former Aureos investment professionals, when

IFC provided an anchor investment of $10 million. LR Global plans to

invest in SMEs, where they believe exit strategies will be easier to

place, and will source deals in-house, as opposed to secondary

transactions. The focus on SMEs is not narrowed by an exclusive focus

on IB. However, many opportunities in LRs deal pipeline could qualify

as IBs by ADBs definition. Agriculture, tourism, and infrastructure are

priority sectors for LR Global, while they remain sector agnostic.

Further, LR Global will focus on investing in value chains of sectorswhere larger players operate.


27/40



26

Figure 5: Fund manager snapshot SEAF

Figure 6: Fund manager snapshot SIDBI-VC

Fund name India Agribusiness Fund

Investors LIC, Omidyar,SIDBI, UBI

Vintage 2010



Target IRR 20-25%

Geographic focus Pan-India

Sector focus Agribusiness value chain


SEAF tracks IRIS compatible metrics such as employment, wages, benefits, training, suppliers, customers, taxes, community development,

formalization and corporate governance. SEAFs development impact reports are available online.


Key contact

Hemendra Mathur

Sample

investmentAbhayCotexCotton seed processing company

SOURCE: Interview with fund; Dalberg re search; ImpactBase

To create the India Agribusiness Fund (IAF), SEAF brought its global

expertise of investing in agribusinesses (40% of global portfolio in the

sector) and experience of investing in India through professionals

with 6 years of investment experience at Kotak. IAF is one of the

countrys few IB-focused sector-specific funds, and invests in SMEs

that operate in the Agribusiness value chain, except upstream players.

Typical opportunities that the fund considers are B2B businesses in

sub-sectors such as agricultural processing, implements, logistics, and

other post-harvest industries. SEAFs investment professionals

recognize the nascence of PE to this sector, and hence spend more

than 50% of their time on the ground, sourcing and monitoring deals.

Given a chance, SEAF would deploy TA for public or shared goods.

Fund name SamriddhFund

Investors DFID

Vintage 2012



Target IRR 15-16%

Geographic focus Low-income states in India



DFID is currently training SIDBI-VC investment professionals on impact measurement, while the fund currently tracks employment. Given

already high transaction and deal management costs, SIDBI prefers simple metrics that investees can easily track.


Key contact

Ananta P. Sarma

Sampleinvestment FabIndiaRetailer of products handmade by rural craftspeople


SIDBI is a government owned financial institution providing debt and

equity to micro, small, and medium-scale enterprises in India. SIDBI

VC is a wholly owned subsidiary, which has set up the Samriddh Fund

with DFID. The funds sector agnostic investment strategy focuses on

SMEs in low-income states in India with potential to increase incomes

of low-income populations. SIDBI believes that an exclusive LIS focus

ensures that their SME investees are also IBs. The fund does not focus

on Northeastern states, however, due to a lack of enabling

infrastructure in those regions currently. SIDBI intends to encourage

its investees to enter LIS markets, and further help them by leveraging

its network within the government, if needed. Any returns over 14%that the fund generates are returned to their current investor, DFID.


28/40



27

6 ECONOMIC FACTSHEET ON LOW-INCOME STATESFigure 7: Summary of key statistics on low-income states in India

SOURCE: Dalberg Analysis, UNDP, India Competitiveness Report-2011, IBEF, UNIDO

GDP growth rate

%

Odisha

Rajasthan

Uttar Pradesh

West Bengal

Arunachal Pradesh

Assam

Manipur

Meghalaya

Mizoram

Nagaland

Tripura

Bihar

7.2%

5.4%

6.3%

7.1%

3.7%

8.4%

6.2%

9.5%

14.7%

3.9%

8.9%

Chhattisgarh

Jharkhand

13.1%

10.8%

India average = 6.5%

6.6%

Madhya Pradesh 12.0%

Per capita income

$ (PPP)

1,885

2,967

3,068

2,797

India average = 3,694

2,708

1,865

3,408

3,033

1,707

2,377

2,717

1,804

1,824

2,673

1,272

82

39

7

19

84

82

38

198

340

251

67

48

194

862

504

Number of clusters


29/40



28

Summary of key facts on low-income states in India:

State,

competitive-

ness ranking

Key facts Major industries Major clusters

Bihar

17 / 29

5 / 15 in

LIS/NES

Bihar recorded the second highest GDPgrowth among all the states

DFIs like IFC, DFID, Kfw, CDC & SIDBI haveBihar as one of their focus states

Bihar government is proactively givingpolicy incentives for Industries &

Investors

Agriculture: Tea,Rubber, Sugarcane,

Tobacco, Dairy,

Paper

Industries: Plastics,Transport

equipment,

Chemicals, Textiles,

Mines, Minerals

Manufacturing Textile sericulture Sugarcane Agro-based

industries

Chhatisgarh

12 / 29

1 / 15 in

LIS/NES

Chhattisgarh accounts for about 16 percent of the nations coal reserves and is

rich in other mineral resources such as

Limestone, Iron-ore, Copper, Bauxite.,

Chhattisgarh is presently one of the fewstates that has surplus power

The state offers a wide range of fiscal andpolicy incentives for businesses and

stands first among LIS & NES in the

competitiveness rankings

DFIs like IFC, DFID, Kfw,CDC & SIDBI haveChhatisgarh as one of their focus states

Agriculture: Foodprocessing

Industries: Mining,Minerals, Iron &

Steel, Cement,Power, IT& ITes,

Biotechnology,

Gems & Jewellery

Iron & steelancillary units

Castings & metalfabrication

Gems & Jewellery Textiles Aluminum

Jharkhand

21 / 29

9 / 15 in

LIS/NES

Jharkhand has around 40 per cent of thecountrys mineral wealth

DFIs like IFC, DFID, Kfw,CDC & SIDBI haveChhatisgarh as one of their focus states

Location Advantage: Closer to the portsof Kolkata, Haldia and Paradip and has

easy access to raw materials.

Agriculture:Rubber, Food &

beverages

Industries: Mining,Minerals, Iron &Steel, Engineering,

Chemicals,

Handloom, Plastics,

Printing &

Packaging, Tourism

Iron & steelancillary units

Engineering &fabrication

Auto components Textiles Casting & metal

fabrication

Madhya

Pradesh

14 / 29

3 / 15 in

LIS/NES

A large number of consumer goodscompanies have manufacturing bases in

the state because it is centrally located

and is equidistant to all major cities of

India

Madhya Pradesh has rich mineralresources and has the largest reserves ofdiamond and copper in India

State government is actively working withWorld bank, IFC, DFID and other DFIs on

host of developmental projects

Agriculture: Agriprocessing, forest

based industries

Industries: Mining,Minerals, Auto &

Auto components,

Textiles, Cement,Pharmaceuticals,

Minerals,

Manufacturing, IT

& ITes, Tourism

Engineering &fabrication

Auto components Textiles Food processing

Odisha

15 / 29

4 / 15 in

LIS/NES

Leads in iron, steel, ferroalloy &aluminium production. It also has a

strong base for coal-based power

generation

Has a stable political environment and isactively working with IFC, DFID and other

development organizations

Offers a wide range of fiscal and policyincentives for businesses

Agriculture: Agri-processing, Food &

beverages

Industries: Mining,Minerals,

Aluminum,

Handloom,Tourism

, Electronics, Iron,steel & Ferroalloy

Food processingindustries

Handloom Handicrafts Textiles Agro & Forest

based industries


30/40



29

State,

competitive-

ness ranking


Rajasthan

15 / 29

4 / 15 in

LIS/NES

It is a natural corridor between thewealthy Northern and the prosperous

Western states of the country, which

makes it an important trade and

commerce centre

Rajasthan is one of the most attractivetourist destinations in India

Rajasthan offers a variety of unexploitedagricultural and mineral resources, which

is indicative of scope for value addition

and exports

Rajasthan s GDP growth rate fell from11% for the year 2010-11 to 5.4% for the

year 2011-12

Agriculture: Agri-processing

Industries: Cement,IT & ITes, Ceramics,

Mining, Minerals,

Steel, Chemicals,

Auto & Auto

components,

Textiles, Gems &

Jewellery, Marble

Ceramics Textiles Marble slates Auto & Auto

components

Food processing Gems & Jewellery

Uttar Pradesh

19 / 297 / 15 in

LIS/NES

Newly formed state government in UttarPradesh is seen as an industry friendlygovernment

Government is actively working withGates foundation, DFID and others

The state has witnessed highinfrastructural growth , which is seen as a

positive facilitator for industrial growth,

in the past few years

Agriculture: Agroprocessing, Foodprocessing

Industries: IT &ITes, Ceramics,

Mineral based

industries,

Tourism, Sports

goods, Leather

based industries,

Textiles, Handloom

& Handicrafts,

Auto & Auto

components

Engineeringequipment

Textiles Leather products Auto & Auto

components

Rice mills Foundry

West Bengal

20 / 29

8 / 15 in

LIS/NES

One of the most needy Low Income state Under the new government , the

erstwhile communist state is actively

looking for a larger role by the private

sector for its growth

It has a good geographical advantagedue to its proximity with sea ,North east

and other landlocked countries

Agriculture: Tea,Jute products, Agri

& Agri allied

industries

Industries: Mining,Minerals,

Petroleum &

Petrochemicals,

Leather, Iron &

Steel, IT, Auto &

Auto components,

Biotechnology

Engineeringequipment

Textiles Leather products Auto & Auto

components

Rice mills Foundry

Arunachal

Pradesh

28 / 29

15 / 15 in

LIS/NES

Undulating topography and varied agro-climatic conditions offer vast potential

for horticulture and growing a variety of

fruits, vegetables, spices, aromatic and

medicinal plants, flowers and mushroom

Central government is taking up manyinitiatives to improve infrastructure and

other amenities in the state

Agriculture: Cane &bamboo,

Horticulture

Industries: Art &crafts, Weaving,

Carpet weaving,

Wood carving,

Ornaments,

Tourism, Saw mills

& plywood, Power,

Mineral based

industries

Textiles Handicrafts Handloom Food processing


31/40



30

State,

competitive-

ness ranking


Assam

22 / 29

10 / 15 in

LIS/NES

Assam is the largest economy of theNortheast region and is the most

industrially advanced state in the

Northeast India

Assam is rich in natural resources such asnatural oil and gas, rubber, tea, and

minerals such as granite, limestone and

kaolin

The state is rich in water resources. Otherpotential areas of investment include

power and energy, mineral-based

industries, tourism and crude oil refining

Agriculture: Tea,Food processing,

Horticulture,

Sericulture

Industries: Coal, Oil& Gas, Limestone,

Cement, Tourism,

Traditional cottage

industry

Tea Handicraft Handloom Food processing

Manipur

27 / 29

14 / 15 inLIS/NES

Manipur has significant potential forgrowing various horticultural crops

because of varied agro-climaticconditions

A wide variety of rare and exoticmedicinal and aromatic plants grow in

Manipur and Entrepreneurs get easy

access for processing and marketing such

plants

With 79.8 per cent literacy rate, Manipuroffers a largely educated workforce.

Good Knowledge of English is an added

advantage of the Manipuri workforce

Agriculture: Foodprocessing,

Sericulture Industries:

Tourism,

Handlooms,

Handicrafts,

Bamboo processing

BambooHandicraft

Handicraft Handloom Food processing

Meghalaya

24 / 2912 / 15 in

LIS/NES

Meghalaya is endowed with abundantnatural resources in terms of flora, fauna,medicinal plants, forests, coal, lime

stone, feldspar, quartz, sillimanite,

granite, industrial clay and uranium

Meghalaya has a literacy rate of 75.5 percent and a majority of local population

speaks and understands English

The state provides good support throughvarious central and State Government

agencies

Agriculture: Agroprocessing, Foodprocessing,

Horticulture, Dairy

& Livestock

Industries:Tourism, Mining,

Cement, Steel

processing,

Handlooms,

Handicrafts,

Hydroelectric

power

Foundry Handicraft Handloom Food processing

Mizoram25 / 29

13 / 15 in

LIS/NES

Mizoram contributes 14 per cent to thecountrys bamboo production; the

climate is ideal for setting up agricultural

and forestry produce-based industries

With a literacy rate of 91.6 per cent,Mizoram offers a highly literate

workforce. Knowledge of English is an

added advantage

With improving connectivity and theestablishment of trade routes with

neighbouring countries, trade facilitation

has improved significantly over the last

decade

Agriculture:Bamboo,

Sericulture, Food

processing,

Medicinal plants,

Horticulture

Industries:Tourism, Energy,

IT, Minerals &

Stones, Handlooms

& Handicrafts

Handicraft Handloom


32/40



31

State,

competitive-

ness ranking


Nagaland

23 / 29

11 / 15 in

LIS/NES

Nagaland has a high literacy rate of 80.1per cent. Majority of the population in

the state speaks English, which is the

official language of the state

The state provides institutional supportthrough various central and State

Government agencies viz., North East

Council, Ministry of Development of

North Eastern Region and Nagaland

Industrial Development Council

Agriculture:Bamboo,

Sericulture,

Horticulture

Industries:Tourism,

Handlooms,

Handicrafts,

Minerals, Mining

Handicraft Handloom

Tripura

18/ 29

6/ 15 in

LIS/NES

Tripura is rich in natural resources suchas natural oil and gas, rubber, tea and

medicinal plants

Tripura is connected with the rest ofNortheast India by National Highway

(NH)-44. Improved rail, air connectivityand establishment of trade routes have

further facilitated the trade

At 87.8 per cent, Tripuras literacy rate ishigher than the national average rate

Agriculture: Tea,Rubber, Bamboo,

Sericulture,

Medicinal Plants,

Horticulture

Industries: NaturalGas, IT & ITes,

Tourism,

Handlooms,

Handicrafts

Handicraft Handloom Bamboo Leather

Sources: Dalberg Analysis, UNDP, India Competitiveness Report-2011, IBEF, UNIDO


33/40



32

7 DEEP DIVES ON PRIORITY SECTORSFigure 8: Sector snapshot of water and sanitation

Figure 9: Sector snapshot of energy access

Key indicators across LIS & NES: Access to water and sanitation

NOTE: Data for Nagaland is N/A

SOURCE: MDG States of India Report 2010; WHO

93

82

52

81

77

83

95

91

33

Assam

Manipur

Jharkhand

Chhatisgarh

Bihar

60

50

Tripura

Meghalaya

80Mizoram

84

India avg.

75

Arunachal 93

West Bengal

Uttar Pradesh

Rajasthan

Odisha

M. P.

18

15

23

17

25

26

60

17

51

India avg.

94

98

66

96

70

89

% of population with

access to improved

sanitation

Keytrends and facts:

% of population with

access to improved

water sources

The Planning Commission has allocated

4.6 times the amount reserved for

improved sanitation in the 12th 5-year

plan (2012-17), amounting to $6.8bn

Government along with bilateral aid and

loans from multilateral development

banks loans have created successful PPP

models

Government of Indias Total Sanitation

Campaign (TSC) is operational in 578

rural districts with an outlay of $3.35bn;

for each sponsored project, the central

govt shares 60% of total cost, while thestate and the community contribute 20%

each

Key policies: JNNURM, National Water

Policy & other state policies

Other low-income States (LIS)Northeastern States (NES)

Key indicators across LIS & NES: Energy access

NOTE: Solid fuels include biomass fuels, such as wood, charcoal, crops or other agricultural waste, du ng, shrubs and straw, and coal.SOURCE: India Census, 2011

90

88

87

80

86

76

80

77

67

India avg.

Tripura 79

Mizoram 45

Meghalaya 83

Manipur 69

Assam 80

Arunachal 70

West Bengal

Uttar Pradesh

Rajasthan

Odisha

M. P.

Jharkhand

Chhatisgarh

Bihar 82

23

53

32

55

31

62

44

37

14

25

31

India avg.

16

62

19

% of people using

kerosene lamps for

lighting

Keytrends andfacts:

% of people using solid

fuels for cooking

Central government is taking up various

key initiatives such as Solar Mission to

electrify the off grid locations

Central government is focusing more on

Nuclear Energy & Solar Energy to

electrify the un electrified villages and

under electrified villages

Solar Mission is expected to create more

than 100,000 jobs and attract USD

820mn investment Central government has announced tax-

free bonds of USD 1.90bn for financing

projects related to power sector

Key policies: Solar Mission, Electricity Act

2003, Electricity Act During 2006,

Revised tariff guidelines, National

Biomass Cook stoves Initiatives (NBCI)

Other low-income States (LIS)NortheasternStates (NES)


34/40



33

Figure 10: Sector snapshot of healthcare

Figure 11: Sector snapshot of education

Key indicators across LIS & NES: Healthcare

SOURCE: HRH Report I; Public Health Foundation of India; World Bank

7.5

6.0

7.1

4.0

2.7

4.9

3.9

4.1

4.0

2.8

Assam 3.2

Arunachal

West Bengal

Uttar Pradesh

Rajasthan

Odisha

M. P.

Jharkhand

Chhatisgarh

Bihar

6.1

India avg.

Tripura 5.3

Mizoram 2.5

Meghalaya 4.5

Manipur

5.7

6.2

5.8

5.0

2.8

2.8

17.9

12.3

7.4

India avg.

6.2

11.8

9.2

10.4

14.1

12.8

# Nurses per 10,000population

Keytrends andfacts:

# Doctors per 10,000population Healthcare is an increasingly attractive

sector for the PE & VC industry

Total expenditure on healthcare is

expected to increase to $81.2 bn by 2015

To meet domestic demand, India needs

$143 bn investments in healthcare by

2030

Government of India has decided to

increase expenditure on healthcare to

2.5% of the GDP by 2017, from the

current 1.4%

Government allots high priority to

proposals related to hospitals, life savingdrugs and equipment

Key policies

Documents

120731 ADB India and Sri Lanka Market Scoping Study ANNEXES