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NextGen aiming to make business more eco-friendly

According to reports, at an age when most people are still wondering about what to do with their lives, college graduates Abhishek Humbad and Richa Bajpai were out to show the world that being eco-friendly can also mean good business. Incubated in IIM-Bangalore and BITS Pilani, their clean tech start-up NextGen, launched in 2009, developed a reactor to convert more than 900 different types of organic waste into natural gas than can be used for commercial purposes.

Statistics speak volumes on the need for this venture’s existence. According to consulting firm AT Kearney, about 3.5 billion litres of diesel is consumed in India every year by telecom tower companies alone at a cost of about Rs 8,500 crore. Another 300 thousand towers are expected to be set up in the next five years which could raise diesel consumption to almost seven billion litres a year.

Hoping to increase productivity while decreasing the environmental impact 25-year old Abhishek Humbad and Richa Bajpai founded NextGen in 2009. It is a venture specialising in carbon and sustainability management. NextGen set up India’s first bio-natural gas plant to power telecom towers in rural India. It works closely with the government on policies related to climate change and has contracts with corporates like Infosys, Wipro and the Godrej group to help them map and reduce their carbon footprint. Take a look at how this idea that was born in a BITS-Pilani dorm room aims to morph into Rs 100 crore venture by 2015.

Using this NextGen power source has made operating telecom towers 30 percent cheaper for portfolio companies like Bharti Infratel, Indus Towers and the American Tower company. With plans to reach 10 megawatts in off-grid power in the next six months, Abhishek explains how they went from zero bank balance venture to being chosen by the World Resources Institute and Confederation of Indian Industry (CII) as a clean tech portfolio company.

On how the journey of NextGen began, Abhishek Humbad, Co-founder, says, “With BITS Pilani being in a very rural domain, we then started working on how carbon credits can actually be used to improve lives in rural India. That is when we figured out that we could use carbon credits to finance rural bio-gas plants.”

In order to achieve their green mission Abhishek and Richa set up the world’s first bio-natural gas plant at Mahabubnagar in Andhra Pradesh in August 2012.

Richa Bajpai,Co-Founder, says, “This is the place from where the agro waste is converted into bio-CNG. It is then bottled into cylinders that are transported to telecom towers where it is put into the genset and electricity is generated to power the telecom towers.”

With a Rs 65 lakh grant from the Royal Bank of Scotland foundation and the Ministry of New and Renewable energy, NextGen’s green innovation is a joint offering with Mahindra Powerol, the largest supplier of diesel gensets to the Indian telecom industry.

With pay per use revenue model with a lock-in for ten years NextGen will earn revenues of around Rs 35 crore per annum through this project. This isn’t enough for the duo as Abhishek and Richa have aggressive short-term expansion plans. They are looking to invest Rs 50 crore to setup 50 plants in the next six months and by 2015, NextGen aims to power 10,000 towers in rural India. So, while companies now seem willing to turn green, what were their initial hurdles?

However, the road wasn’t an easy one. “Going to large corporates like Intel or Infosys and telling them, ‘I am going to advice you on something relating to your sustainability in carbon strategy.’ Why would somebody listen to a 22-year old? But then, we gradually build on that and we have a great list of clients with us as of now. The client list speaks for itself as of now,” adds Bajpai.

The duo seems to have the pulse of the market place just right. On the policy side, they are working with the ministry of corporate affairs on developing a corporate social responsibility accounting structure that will help companies define and account for this sort of socially responsible expenditure. On the business side, they have tied up with Mindtree Consulting to develop India’s first sustainability animation management IT tool, an innovation that helps organisations effectively track their sustainability performance.

With the distinction of being the only accredited partner of the carbon disclosure project in India and an organisational stake holder of the global reporting initiative, NextGen has been working with clients like ICICI Bank, Intel, HDFC Bank, Godrej group, Dabur, Infosys, Wipro and Jet Airways to generate their sustainability report. With a team of 45 spread across India, Sri Lanka, Maldives, Bangladesh and the Middle East NextGen is already at a million plus in revenues per annum and is now eyeing markets in Europe and Australia.

Humbad says, “The revenue model is based on providing we act as outsource sustainability department for these companies and we charge them for that. On the green telecom side, on the waste to energy side we sell power on a per Kwh basis. We sell this power to the telecom towers. We have a 10 year power purchase agreement and that is how our revenue model is. We earn revenues on a per Kwh basis.”

Having raised a strategic angel round earlier and with partners, Mindtree and Mahindra’s indirect investors, Abhishek and Richa hope to raise a large round of funding through a mix of debt and equity. Having made waves across both the private and the public sector on domestic shores team, NextGen dreams of becoming the go to outsource sustainability department of choice for corporates and governments across the globe, helping them reach the Rs 100 crore revenue mark by 2015.

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