nasscom engineering summit 2014: panel discussion ii b: is india an engineering hub? : dr. wilfried...

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Is India an Engineering Hub? Dr. Wilfried Aulbur [email protected]

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Pune, 8th October, 2014



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FRUGAL products are a unique opportunity for emerging markets in general and India in particular

Definition of FRUGAL products

ATTRIBUTES

Characteristics typical of FRUGAL products

Simple Complex

High volume Medium volume Low volume

Robust/maintenance-friendly Fragile/laborious to maintain

CHARACTERISTICS

Emerging markets Low-end segments in established markets

High-end segments in established markets

Low price Medium price High price/premium

Low-low-end Low-end Mid-end High-end

Growing

Local

Affordable

Functional

Robust

User-friendly

F

R

U

G

A

L

DIMENSION

Market-/ customer-related characteristics

Product-related characteristics

Source: Roland Berger


A

The DRIVE : Emerging market opportunities make FRUGAL innovation strategically important


B

The CHALLENGE:

Distinct customer needs require FRUGAL value chain


C

THE APPROACH: In-depth analysis of FRUGAL product development process


D THE FRUGAL CASE STUDIES: 4 case examples on FRUGAL product innovations



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Case 1: Low cost refrigerator developed by Godrej

Source: Company websites, Roland Berger

POTENTIAL MARKET size for FRUGAL product ~ 250 million households

Chotukool by Godrej & Boyce Cost: INR 3,790

1 EXISTING PRODUCT

Conventional refrigerators by Samsung, LG, Panasonic, Godrej, etc. Cost: min. INR 8,000

> High cost, big size and portability are issues for the rural customer

> Rural customers need just enough capacity to keep daily milk, vegetables & food

> Erratic power supply in rural areas limits usage of conventional refrigerators

2 FRUGAL PRODUCT

% of India's population with a refrigerator

Have refrigerator 18%

No refrigerator 82%

> Low cost, low energy cooling

solution, designed keeping in view

the needs of the rural customer.

> Has fully battery operated/invertor

mode as well

> Launched in 2011

HOME APPLIANCES



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Case 2: Low Cost Water Purifier

Source: Company website , Roland Berger

WATER PURIFIER MARKET IN INDIA ~ USD 230 MILLION

1 EXISTING PRODUCT

Purifiers from KENT, Aquaguard, HUL etc. UV / RO based purifiers

> High cost water purifiers are not affordable to low income groups

> Poor infrastructure of houses do not permit installation devices

> Electricity fluctuations and lack of running water supply in rural areas; hence UV or RO based devices do not function well

> Lack of awareness about safe drinking water among rural population

2 FRUGAL PRODUCT % of India's population with

access to safe drinking water

> Low cost purifiers suitable for rural usage as

it does not require running water or electricity

> Portable, easy to use solution effective in

killing pathogens decreasing chances of

water borne diseases

Has access 15%

No access 85%

TATA Swach HUL Pureit

Purifier Cost ~ INR 1,000

Purifier Cost ~ INR 5,000

HOME APPLIANCES



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Case 3: Biomass power plants by Husk Power Systems

POTENTIAL MARKET size for FRUGAL product ~ 528 million

Small biomass power plants by Husk Power Systems

1 EXISTING MARKET

Use of kerosene lamps for lighting & cooking in areas that are off grid & do not have traditional electricity supply

> More than 44% people in India

have no access to electricity > Monthly household income ranges

between INR 3,500-5,000 > Use of kerosene causes indoor

air pollution, causing 4 million deaths worldwide annually (WHO estimate)

2 FRUGAL SOLUTION

% of India's population with grid electricity

Off-grid areas 44%

Grid electricity available 56%

> Provides low cost, safe and reliable source of power

> Uses rice husk as fuel, a waste product of rice milling process

Source:: Industry reports , Roland Berger

Average cost: INR 200/month per household

Average cost: INR 100/month per household

Enough rice husk is available to electrify all of 125,000 villages of India. Currently rice husks are disposed off in landfills

ENERGY



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Case 4: GE's low cost ECG machine

Equipment cost: INR 25,000 Cost to patient: INR 9/use

EXISTING PRODUCT

ECG machines from General Electric, Philips, Siemens etc.

> Lack of capital in local health care centres to buy sophisticated medical equipments

> Poor infrastructure, electricity fluctuations and shortage of trained medical staff in rural health care centres restricts use of high end medical equipment

> Poor roads or public transportation system make it difficult for people to access the clinics/hospitals

– 80% of the specialist healthcare providers are clustered in urban areas

2 FRUGAL PRODUCT

INDIA'S ECG EQUIPMENT MARKET

> Low cost device, offers accuracy, convenience and value for money

> Light weight & ultra portable MAC i is easy

to operate, aids in faster, more confident cardiac assessment ensuring better patient care

Equipment Cost ~ INR 100,000 Cost to patient ~ INR 1,000/use

MAC i by General Electric 'Developed for India in India'

303

260223

196171160

140130120

0

50

100

150

200

250

300

350

2015 2014

+12%

2017 2016 2013 2012 2011 2010 2009

ECG Equipment Market size in INDIA in INR crore

Source: Industry reports , Roland Berger

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Over 2 million people in India die every year due to heart related diseases

MEDTECH


E

OUTLOOK: FRUGAL products will equally impact developed markets as "reverse innovations"


IN SUMMARY: INDIA knows how to engineer products and even send them up to Mars We may still need to turn islands of excellence into a broad-based engineering DNA

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