Consultancy major KPMG India has set up an eight member infrastructure convergence cell comprising of senior executives of the company such as directors and associate directors.
Explaining the rationale behind the move, KPMG executive director, Harindran Nair said: "Convergence is taking place not only in the ICE (information, communication and entertainment) sector as is commonly believed. It is taking place in the infrastructure sector too. For instance, water distribution companies are foraying into the power sector elsewhere in the world. Such convergence will happen here too, and we are gearing up to exploit the opportunity."
In the UK, Scottish Power, which distributes power, has forayed into water distribution. Centrica, an offshoot of British Gas, supplies gas and has also positioned as a total solutions provider to the customer.
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The cell set up by the consultancy firm comprises of executives who have international experience and they are backed by KPMG's global team.
Infrastructure is a sector that is very much a regulated one globally. In India, for instance, the rate of return for private power producers has been capped at 16 per cent.
"It makes sense for these companies to diversify into allied infrastructure areas. Firstly, they now have two revenue streams. Secondly, stockmarkets react favourably to such a move. Thirdly, such diversification also enables a company enter certain unregulated areas. Such companies can also be more competitive in the market as they can tap a common pool of manpower," says Nair.
He points out the example of BSES, which is basically a power company and has now got into the telecom sector through a subsidiary.
Although BSES operates in two regulated sectors, power and telecom, it has the added advantage of functioning as an ISP, which is an unregulated industry. It can also set up data centers.
According to Nair, along with the ongoing privatisation of power distribution in New Delhi, steps should be taken to privatise water distribution.
He points out that this would also take care of problems like last-mile linkage. It also makes sense since both power and water can be supplied through a common duct.