Five Verdurous Years


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Verdurous completes five meaningful years of operation

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Five Verdurous Years

  1. 1. The verdurous planet
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  3. 3. The Vatican's Planetary Stewardship initiative envisages eco-restoration; Facing page: Penguin 'Sir' Nils Olav inspects a guard of honor (Reuters image)
  4. 4. King Knights Emperor Penguin Nils Olav, an honorary member and mascot of the Norwegian King's Guard, resident of the Edinburgh zoo, received a regimental knighthood in August 2008. King Harald the Fifth of Norway described Nils as a penguin "in every way qualified to receive the honour and dignity of knighthood". The Vatican is slated to become the first ‘carbon-neutral’ sovereign state through the proposed Vatican Climate Forest to be created in Hungary's Bükk National Park, sized to absorb its annual carbon emissions. This is over and above its efforts to reduce its carbon footprint through enhanced efficiency of energy usage and the increased use of solar power. “When man forgets that he is a faithful servant of this earth, it becomes a desert that threatens the survival of all creation.” – Pope Benedict XVI 3
  5. 5. Spreading its wings and elevating green firms in the pecking order: The Verdurous Index
  6. 6. The Verdurous India Index The Verdurous India Index (“Verdurous 25”), is a modified market capitalization based index comprising 25 firms listed on India’s National Stock Exchange (NSE). This specially constituted index comprising both, ‘pure-play’ green stocks viz., wind energy generation, waste-water treatment etc., as well as ‘old-economy’ manufacturing sectors viz., cement, automotive, sugar etc., tracks the genuine ‘greenness’ of the Indian economy, and is the first of its kind anywhere in the world. World Environment day, the 5th of June 2009, is the base date for index computation with a base value of 1000. The index is tracked over four years, approximately overlapping with the length of an entire business cycle, and has emerged as a low-risk portfolio, with returns comparable to the benchmark NSE500 index. Periodic updates and other details relating to the index are posted on 5
  7. 7. A panaromic view of the highest peaks in the Himalayas; a small-hydro power generation plant in Nepal.
  8. 8. Earthly Intervention Clean Energy Development Bank, Nepal Nepal is an energy resource surplus, electric power deficient country, further set-back by the decade-long power struggle. The Clean Energy Development Bank, Nepal, is specially constituted to stimulate the renewable energy sector in Nepal, helping harness the abundantly available small hydro power and other clean sources such as wind, solar PV, solar thermal, biogas etc. Verdurous has undertaken a thread- bare analysis of the macroeconomic and context-specific factors impacting the viability of bank operations: ascertained the market opportunity, evaluated the industry structure and mapped the bank’s competitive positioning. The due diligence investigation has been carried out on behalf of FMO and Triodos Bank, The Netherlands. Strategies are developed to enable the bank maintain focus on financial intermediation for the clean energy sector, and to differentiate its product offering. Client Feedback “..your report has been quite a pleasure to read; well informed, well delivered; .. conclusions are very valuable. 7
  9. 9. Small hydro power offers hope for bridging the energy deficit in South Asia: A 2MW small hydro power plant in southern India
  10. 10. Large PE investments in small hydro power Verdurous has developed a pipeline of investment projects, primarily in the small-hydro-power, for a Dutch / Swiss private equity fund seeking to invest in clean energy projects in emerging markets in south Asia. In addition, to Indian projects, Verdurous personnel have conducted detailed due diligence investigations on investment opportunities in Nepal and Sri Lanka covering several technology packages including waste to energy, biomass based power generation, sugarcane cogeneration, large scale wind energy, solar thermal systems etc. 9
  11. 11. A tribal lady cooking with firewood (picture courtesy Dr.M.G.Satish); tender coconut displayed along an inter- state highway.
  12. 12. The roads less straddled: Rural Energy Initiatives Verdurous personnel have undertaken an independent assessment of rural initiatives, essentially involving the set-up of supply chains for energy technology and sources, viz., solar PV, LPG bottles, etc., and for energy efficient devices and gadgets viz., LED based lighting systems, lanterns, pressure cookers etc. Three distinct investments are analyzed: the constitution of a dedicated clean- energy private equity fund, an energy service company and a financial intermediary focussing on grass-roots initiatives. A detailed assessment report was prepared for the Vienna, Austria based Renewable Energy and Energy Efficiency Partnership (REEEP), containing inter alia, a synthesis of the lessons learnt from each initiative and an estimation of the sustainability of each of the projects. Client Feedback “..thank you sincerely for your efforts and assistance with this project.” “..the impact assessments look good..thanks for doing a good job.” 11
  13. 13. Verdurous personnel discussing technology related issues with on-site staff at a wind-farm in Southern India
  14. 14. Sailing Upwind PE Investments in Wind Farm Consolidation In the capacity of resident partner, Verdurous has forged an investment partnership between a reputed US based private equity fund and a large Indian business group. The investment envisages consolidating the wind energy generation capacity in the country by acquiring wind energy generators currently owned by disparate entities. The venture is slated to grow through green-field expansion and brown-field acquisition. Verdurous has also undertaken detailed due diligence of the first lot of wind farms, aggregating over 75MW of capacity employing traditional as well as contemporary techniques including the valuation of ‘real’ options for growing the venture. The detailed business case for the venture was developed. 13
  15. 15. Concern for the natural environment: King Pari left his chariot to support a wild jasmine creeper Logo design courtesy: Chennaveeramma Noolvi, Nidhi Varma, Annie Varghese Cherian, Bharath Urs, Archana Urs, Pramodnath D.
  16. 16. The Verdurous Logo The 9th Century Chola King from southern India, “Vallal” (literally patron or benefactor) Pari, was renowned for his sense of fairness and justice and above all his generosity towards and care for all things living. On one of his journeys through the forest, he observed that the tree hitherto supporting a creeper had been chopped. Legend has it that he offered his chariot to support the wild jasmine creeper in place of the tree. This is by far the most magnanimous gesture in recorded history, on the part of any king, in caring not just for humans but for mute creatures and plants as well. Verdurous draws inspiration from Vallal Pari’s concern for the natural environment. 15
  17. 17. Cool guy The ‘Ice Man’ of Ladakh Over the past 22 years, eco-activist and Civil Engineer, Chewang Norphel has ‘built’ over 12 glaciers by diverting melt-water through a network of pipes into artificial lakes in the shaded side of mountain valleys. He is in the process of building at least 5 more glaciers. A dam or embankment is built to retain water, which freezes at night and remains frozen in the absence of direct sunlight. At the start of summer, the glacier melts and releases water into the rivers below. Norphel has also designed instruction material to ensure that his valuable knowledge would survive him. 16
  18. 18. Chhewang Norphel explains how the stream from a glacier will be diverted into the shade by the channel. Photo © Andrée-Marie Dussault.
  19. 19. Enr-on or off? Renewable Energy for Maharashtra Verdurous was invited by GREENPEACE International to undertake an assessment of the Renewable Energy potential in the western Indian state of Maharashtra. Resource availability, realizable potential and commercial viability were studied item-wise for each technology option. The project culminated in putting forth plausible solutions for the power crisis afflicting the state. The effort was intended at pre-empting the rejuvenation of the moth-balled Dhabol Power Project originally put up by the Enron Corporation. Client Feedback “..your study covers all that we want quite comprehensively. We acknowledge the speed and quality of work which you have produced.” 18
  20. 20. Windfarm in rural Maharashtra, India. Picture courtesy Recharge Newsletter, Recharge AS, Norway.
  21. 21. Research Projects Broad-basing ‘green’ stock market indices: a concept note, Int. J. Green Economics, Vol.2, No.4, 2008. True environmental performance of an economy is indexed by the eco- sensitivity of mainstream businesses. Broad-basing green stock-market indices could help recognize and reward superior environmental performance and ensure adequate representation in emerging markets with few ‘pure- play enviro’ companies listed. Verdurous has constructed a ‘green’ index for the Indian market and has tracked it over the length of a business cycle. Ambitious extensions of the index are in the works. The Persistence of Green Goodwill, forthcoming issues of Environment, Development & Sustainability, Springer BV Verdurous has observed that investor concern for the environment differs across industry sectors and the correlation between environmental credentials and valuation is, at best, weak and short- lived. Periodic release of environmental performance reports by credible, independent agencies would help investors take cognizance of such information. 20
  22. 22. It is time for businesses to focus on “green goodwill”
  23. 23. Research Projects Food V. Fuel: Renewable Energy, 34 / 4, April 2009 (Official Journal of the World Renewable Energy Network) The Environmental impacts of biofuels are determined substantially by the agricultural practices during cultivation. In each market, the pricing of liquid biofuels – ethanol and biodiesel – is determined by the administered prices of gasoline (petrol) and diesel they respectively seek to supplement. Verdurous has concluded that relative pricing of agricultural produce viz., oil-yielding seed could be managed so as to ensure that food-crop land is not encroached upon in favor of fuel plantations. Reciprocal monopoly, asymmetric payoffs and exit options in the Indian sugarcane cogeneration sector: Power generated from bagasse at a sugar mill cannot prop up an otherwise unviable sugar operation. Verdurous has studied the incentive structures faced by various constituents of the value chain and has observed that complementary product pricing (“razor and blade pricing”) cannot be applied to this setting and that sugar cycles can be eliminated by managing the relative terms-of-trade of substitute crops. 22
  24. 24. Coconut coir / shells being transported for use as fuel
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