White Paper on Australian Market Opportunities for

Prepared by

Parthasarathy Bhaumik

Content

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1. Executive Summary Page 3 2. Australian Industry Outlook Page 6

3. Competencies Page 14

4. Service Differentiators Page 15

5. Why Australian Market ? Page 16

6. Opportunities Page 17

7. Positioning Page 20

8. Action Plan Page 21

9. Partho’s Value Add to the Business Page 22

Executive Summary

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Australian Market Management consultants provide a range of services to businesses in Australia. These services primarily involve implementing new practices and processes to improve business efficiency. Key industry services include consulting on financial performance, business growth strategies, risk-minimising processes, human resource optimisation and sustainability issues. These services, particularly on large projects, tend to be provided simultaneously, with some variance depending on a client's needs. The Management Consulting industry has grown slowly over the past five years. Industry Consulting operators have partly offset this trend by: • Increasingly incorporating analytics into their services, which offer businesses greater

understanding of their business and clients. • Introducing new business processes and enhancing operating efficiencies. Consulting market of Australia is in the mature phase with many players and fierce competition amongst the players. With low entry barrier, many try to enter the market, and they choose to operate in niche segments. There is hardly any difference with the product ranges offered by the companies.

Executive Summary

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is one of the largest independent engineering consultants in the world. With over 60 years in the business it has created a enviable global reputation based on trust. has a multidisciplinary team of professionals with in-depth understanding of the latest trends, combining creativity with initiatives. In 2008, added a new dimension to its business offerings in the form of Business & Technology Consulting, to focus on meeting emerging challenges in the rapidly changing global business and technology. Imperatives for Growth • has categorised its customer base into five industry segments based on its respective needs,

and they are – Steel, Non-Ferrous, Energy, Mining, and Infrastructure; and the fields of services cover Business & Technology, Engineering, Project Management and Operations

• The industries core needs vary from – ‘quality service and products’, ‘operational excellence’, ‘cost optimisation’, ‘productivity improvement’ and ‘market strategy’ to name a few.

• Providing innovative solutions and personalised service to the customers seems to be the key competitive driver for in consulting industry.

Executive Summary

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White Paper Objective

• One of the few independent organisation that has provided services in both developed and developing markets.

• With a flat organisation structure, it can provide its clients with fast resolutions and customised service.

• As an independent organisation it gives unbiased advice, and hence, provides value based service to its clients.

• Combined talents pool in core engineering, project management and IT areas positions in an unique manner unmatched by its competitors

Competitive Differentiator

• To counter competition and meet its growth objective, is planning to enter the Australian market.

• The deliverable of this white paper is to provide an overview of the Australian Industry outlook, and in the process highlights the positive opportunities that would facilitate the decision to enter the new market and the gaps that need to be closed for an effective and efficient implementation.

Australian Industry Outlook Australia needs reforms that improve productivity and reduce business costs to remain competitive. Australian industry must act on opportunities, and service sectors in particular, will play an important role in ensuring that Australia remains a modern dynamic economy.

Mining: • Instability in the euro area and economic volatility in China pose risks for the Australian

mining sector. • Decline in global commodity prices:

• Would likely see a shift in Australia’s mining export profile; • Would likely to threaten corporate profits; • Lead to mine closures; • Would force companies to consider how to sustain their cost take-outs and drive

ongoing productivity improvements;

Electricity (Source – Australian Energy Market Operator); • Consumption in the residential and commercial sector is forecast to recover from 129,743

GWh to 133,163 GWh (0.9% annually) over the short term: Although consumption is recovering, per capita consumption continues to decline, indicating population growth is a key driver of this increase.

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Australian Industry Outlook Electricity contd.: • Underlying consumption is recovering due to a forecast decline in electricity prices in most

regions, and projected growth in income per capita; • Rooftop Photo Voltaic (PV) continues to display strong growth (18% annually), with

continued installations in both the residential and commercial sectors: • Coal-fired generation declined by 5 per cent in 2013–14. Despite this, coal remained the

largest source of electricity generation in Australia at 61 per cent. Natural gas constituted 22 per cent of total electricity generation in 2013–14. (Source: Australian Energy Statistics)

• Renewable generation rose by 12 per cent in 2013–14, comprising 15 per cent of total generation in Australia. Most growth continued to occur in wind and solar energy, with the share of hydro in total renewable generation falling below 50 per cent for the first time.

• Over the past five years, the cost of retail energy has grown dramatically. Much of the increase has been attributed to growth in the costs of electricity distribution and transmission, which are determined by the industry’s asset base.

• The industry’s investment and charging decisions are heavily regulated, and have direct impacts on profit margins.

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Australian Industry Outlook Transportation: • Over 70 per cent of all domestic passenger movements within Australia occur on roads.

Driving remains by far the preferred means of transport within cities and for trips up to 400 kilometres.

• Based on current trends, congestion will increase imposing constraints on freeways and highways thus constraining productivity within cities and regions.

• Truck traffic is predicted to increase by around 50 per cent in 2030. Governments face challenges funding road infrastructure improvements to service both a larger freight task and a growing light commercial vehicle task.

• Rail dominates freight movements between Perth and the eastern states. Rail freight, mainly supporting commodity exports, is expected to jump by two-thirds by 2030, increasing pressure on the rail system.

• The freight task and volume of container traffic is increasing substantially proportional to the overall growth rate of the economy.

• While carrying only 0.1 per cent of Australia’s international freight by weight, aviation freight makes up nearly 21 per cent of freight by value.

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Australian Industry Outlook Each industry’s share of GDP in 2004–05 in comparison with 2014–15. • The services industries account

for the majority of production (around 60 per cent).

• Mining’s share of GDP has risen rapidly over the last decade as a result of the resources boom, which also supported growth in construction output.

• Manufacturing’s share of GDP has fallen the most sharply of any industry. Manufacturing is the only sector which has seen its actual production fall over the past decade.

Industry shares of GDP (per cent), 2004–05 versus 2014–15 Source: ABS cat. no. 6291.0.55.003, table 4

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Australian Industry Outlook

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Australian Industry Outlook

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Australian Industry Outlook Australia can be significantly affected by international events. The graph below projects which countries account for what proportion of Australian exports and where Australian imports are sourced.

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Australian Industry Outlook

Australia’s resources and energy commodity exports , by selected commodities

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Competencies

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Core Sectors and Key Services

Sectors

Services Steel Non Ferrous Energy Mining Infrastructure

Business & Technology

Operations

Project Management

Engineering

Markets & Strategy

Policy Studies

Finance & Restructuring

Operations Management

Information Technology

Iron & Steel

Non-Ferrous

Mining & Mineral

Processing Energy

Infrastructure

Planning Project Control

Risk Management

Governance Decision Analysis

Cost Optimizati

on

Sourcing optimizat

ion

Productivity Improvement

Capacity Consolidation

Energy Reduction

Service Differentiators

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• Leadership by integrating engineering, technology, economics and operations ; • Operational excellence from Concept to Completion; • Long-term trusted relationship with customers; • Capability of developing customized IT enabled solutions to resolve operation, maintenance

and logistic issues and complete Management Information System to enhance production capacity and plant productivity;

• Development of Energy Management System to assist in energy management for Electricity

Distribution; • Global Network provides uninterrupted services to clients irrespective of geographical

locations; • Powerful culture of innovation, collaboration and teaming;

Why Australian Market ?

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• service range and core competence have demand in Australian industrial sectors.

• Low overheads and operational synergies would play key role in entering Australian market.

• Inter company technology transfer reducing development cost. • Customized IT enabled solutions like ERP, CMMS and Energy Management System would be

a major competitive advantage to Australian SMEs who are very cost sensitive.

Opportunities

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• In Australia, overall engineering consulting services are growing in response to the surge in infrastructure construction (particularly mining, energy and road and bridge construction), resources and environmental markets. Outsourcing of engineering services has been a growing trend amongst large private and public sector corporations for efficiency gains.

• The Australian Government is encouraging privatisation of state and territory electricity

assets to increase competition amongst electricity generators and retailers with the intent to encourage innovation and deliver energy products and services to consumers at the lowest cost. • With extensive knowledge in conventional thermal and renewable energy based power

generation and distribution plants, can assist the electricity business assets to improve productivity, lower their cost base and ensure effective energy management.

• Fluctuating commodity prices and increasing cost base have reduced profits for mining

companies in Australia. This has triggered an urgent need of capital investment discipline and focus on improving productivity. has capabilities to make strategic changes to process improvements and introduce technologies that can help deliver labour and asset productivity improvements in mining companies.

Opportunities

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• The consistently falling cash rate has contributed to the decline in revenue of operators in the banking industries, which are highly sensitive to movements in the cash rate. Wages are often the second-highest cost for operators in finance industries. Hence, to maintain and enhance margins businesses are focusing on improving productivity through investments in technology. can assist banks in improving technologies to increase automation, information management and efficiency.

• Growth in revenue (including average revenue per user) and user penetration are anticipated in e Commerce (B2C) market in Australia. • As an expansion strategy, can plan to enter the new industry growth area of e

Commerce by offering its ERP solutions to help businesses reduce cost, effectively collect and distribute information, and increase productivity by supporting ‘pull type’ supply chain management.

• The current Australian Government policy on the usage of environmental management

systems is that government agencies are encouraged to develop and implement an environmental management system for at least one of their sites. with capabilities in providing comprehensive range of environmental related services can help businesses in ensuring their projects when implemented are in compliance with environmental regulatory standards. can also offer its services to Australian Government to conduct Environment Impact Assessments.

Opportunities

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• Australian Bureau of Infrastructure, Transport and Regional Economics estimated wastage of a total of $9.4 billion as the social cost of congestion for the year 2005 in the major Australian cities and the cost is estimated to be more than doubled by 2020. The State Governments in Australia are trying to find solution to the problem through Public Private Partnership. • can conduct feasibility studies on behalf of State Governments and propose

management measures to combat congestion or how to get the best from a given stock of infrastructure and changing demand scenarios.

Positioning

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Dif

fere

nti

ati

on

Relative Cost

Differentiating

through tech. &

service

Tier 1 Consulting

companies

Tier 2 Consulting

companies

Low

Low

High

High

’s key entry strategy would be positioning it as a engineering and management consulting company with: • Over 60 years experience as a trusted

engineering and consulting house; • Capability to develop customized IT

enabled systems to address operation, maintenance and logistic issues;

• Competence in enhancing operational productivity and cost optimisation in varied sectors;

• Advantageous low operational cost to counter entry barrier in new market;

’s Action Plan

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An action program needs to be developed to ensure effective implementation of the strategies to enter Australian market. This involves listing of specific actions in different areas: on what needs to be done? Who will be responsible?

What Who

Set up an operating arm in Australia Legal

Prepare a briefing presentation for the Australian market focusing on ’s products and its benefits

/ Partho

Develop strategy paper for entry into Australian market

Develop strategy implementation plan in Australia / Partho

Appoint a team responsible for Australia

Upgrade the current website - to make it contemporary and compatible with mobile hand held

devices; - Include publications to market ’s Intellectual Capital and its success

for the past 60 years of its operation. - Turnaround success stories

Partho’s Value Add to the Business

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• Assist in setting up an operating arm for in Australia;

• Conduct market research and develop markets with key inputs and support from ;

• Assist in development and implementation of strategic business plan;

• Identifying and managing risks for business and projects managed for clients;

• Develop ongoing annual business plan and manage budget for Australian operations;

• Identify client requirements and coordinate to provide customer service to create customer advocacy;

• Manage projects from initiation phase to project close phase;