Although still in a nascent stage, private weather consulting is picking up fast, thanks to the rise in the number of sectors that need accurate weather predictions to save costs and make profits
The summers are getting hotter and longer and monsoons have failed, so much so that 246 of the 593 districts in India have been declared drought-hit. The situation is so grave that in the last two months itself, around 20 farmer suicides have been reported from across the country.
If you thought that agriculture was the only major sector that is facing the consequences of the change in weather, then you are probably wrong. A number of industries have been impacted, directly or indirectly. What are these industries doing to mitigate the ill effects? Better planning is one option, but for that these players need accurate weather data. And this is proving to be a lucrative business opportunity for a handful of players.
Take the case of the cabbage farmers of Uttrakhand. The farmers were suffering huge losses due to unpredictable rainfalls. For them, excessive rainfall meant water logging that led to total washing off of the cabbage seeds, and deficit rainfall meant irrigation-related problems. The result was low yield and subsequent losses. Enter Weather Risk Management Services Limited (WRL), which tied-up with SAFAL to provide weather data to these farmers. The company set up ten weather stations covering the region to provide advance knowledge of weather to these farmers. Now, with this information, the farmers are able to arrange for water supplies in advance, take preventive measures such as spraying pesticides, and so on. The company also offers agro-advisory services and insurance cover to the farmers.
The market for private weather consulting in India is still at a very nascent stage. Players started to enter this segment as late as 2003. Anuj Kumbhat, the co-founder of WRL says, “The industry is very fragmented with just a handful of players. And the companies that are there cater to entirely different sectors. And as none of them is a listed company, it is very difficult to determine the size of the industry currently.”
The sectors that these players usually cater to are agriculture, media, power, insurance and commodity trading. This is just the tip of the iceberg, as there are a number of industries that are directly dependent on weather and are yet to be tapped. This brings us to the most pertinent question—why are these industries not opting for data from the Indian Meteorology Department (IMD), which has the best of the researchers, good infrastructure and provides information for free?
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IMD has around 525 automatic stations at the district level. India still needs 6,000-7,000 automatic weather stations and 25,000-35,000 rain gauges to have representative data. So we do not compete with the IMD, but complement them. - Yogesh Patil
Assistant Manager, Crop & Weather Intelligence Group, NCMS |
Looking beyond the IMD
The major private players in this sector, whom DARE spoke with during the course of this story, accepted that they were not competing with the IMD, instead complementing the organization’s work. According to Yogesh Patil, Assistant Manager, Crop & Weather Intelligence Group, National Collateral Management Services Limited (NCMSL), “IMD currently has around 525 automatic stations at the district level. India still needs 6,000-7,000 automatic weather stations and 25,000-35,000 rain gauges to have representative weather data. So we do not work as a competitor to the IMD, but we complement them.”
The IMD is a government organization that provides weather data for free. This means that it does not provide weather data as per the client’s requirement. Some sectors, such as power, insurance, etc need more specific and accurate weather data, which is updated at regular intervals, before taking decisions that have a direct impact on their costs. Therefore, the private players who have identified an opportunity area are providing weather information as a product to these industries. As this data is provided at a cost, this also means greater accountability on the part of these private players. Another issue is that the IMD does district level forecast, whereas private companies like the WRL provide micro-level agricultural forecast up to the block level.
Business functions
There are only a handful of private players catering to distinct sectors. Therefore, a plethora of opportunities remain untapped. The existent companies currently provide weather data or weather consulting. These payers function differently, depending on the requirements of the end-user.
For example, Jatin Singh of Delhi-based Skymet, which was launched in 2003, says, “We basically collect weather data either available freely on the Internet or buy them from agencies, and process it using software created by us. We have four verticals—one we work with the media and provide forecast to TV channels and newspapers; we work with power companies—we have also created a load forecasting software; we work with shipping companies like ONGC; and we also do a significant amount of work in the telecom sector.” The company has 44 people on its payroll, including several meteorologists, programmers and graphic designers who do the packaging.
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Industry Lanscape |
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Player Name |
Skymet |
NCMSL |
WRMS |
| Year of launch |
2003 |
2005 |
2004 |
|
What they do |
Collect weather data from various sources and process it |
Install weather stations and provide weather data |
Install weather stations and provide weather data and weather forecasts |
|
Sectors served |
Mainly media, power, telecom and shipping | Insurance, commodity exchanges, energy companies, construction and transport | Media, FMCG and insurance |
| Performance in 2008 | Rs 1.8 crore revenue | Weather business had a turnover of Rs 2.5 crore | Rs 85 lakh turnover |
NCMSL specializes in setting up automatic weather stations to provide weather data. The company claims to have set up nearly 478 private weather stations across 16 states. According to Yogesh Patil, “Currently we provide real-time weather data and crop-based analysis. We analyze the actual crop health status with real-time data and satellite pictures.” The company’s customer profile includes companies in insurance, commodity, energy, construction and transport. The company has employed approximately 30 people located across 16 states to monitor weather, including field engineers and meteorologists. The company had a turnover of around Rs 2.5 crore in the weather business last year.
Kanpur-based Weather Risk Management Services mostly caters to the weather insurance sector. According to Ajay Khumbat, “We are focused in our approach. We do not place weather stations across the country, but in agri-zones like some districts in Tamil Nadu, Andhra Pradesh, Punjab, West Bengal etc, according to the client’s needs. We install weather stations and provide weather data and weather forecast. The idea is to integrate both data from satellites-based forecasting as well as data from the weather stations. This database is used to generate a good forecast. This process needs a timeframe of three to five years to be able to generate good data and forecast. Plus, you need to have good IT support, which is very fundamental. On the whole, you need to have a very long-term view and stay invested. ”
Accuracy of weather data is one important factor, and the error margin depends on the industry the data is required for. For example, the weather data required by the power industry is very precise. The temperature has to be within ± 1 degree of the actual value. On the other hand, for agriculture, a forecast stating that it would be very hot or rainy would be enough. For players in the sector, accuracy depends on a number of issues. Explains Ajay, “Accuracy depends on a number of things like the place, tools used for forecast, kind of forecast you are generating etc. For example, it would be easy to forecast whether it would rain tomorrow or not, but it will be more difficult to forecast whether it would be a light rainfall, moderate rainfall or heavy rainfall.”
The pricing of the products depends on the kind of information the client wants. For example, WRL has come up with a product, a prepaid scratch card, for farmers that costs as little as Rs 150. Anuj explains, “Similarly, if you need high-end products with real-time weather monitoring and an update every half-an-hour, then the cost is going to be around Rs 4000-5000 per month per station.” Moreover, depending on the industry, a penalty may also be imposed for incorrect data. For example, the power trading industry requires precision forecasting and may penalize for incorrect data.
Target customers
Power companies: The power trading market is entirely dependent on weather as the amount of power a company needs or a city needs depends on the climate. These companies, therefore, need accurate weather data to purchase power in advance. According to Ajey Maharaj, a spokesperson of the NDPL, “In case of an emergency purchase, the power per unit can go up to Rs 10-12 per unit. Therefore, advance information of weather helps to avoid such circumstances and save costs.” According to Jatin Singh, “We provide a very specific weather forecast, which is frequently updated in 15 minutes. There are very strict parameters for the power industry. For example, the temperature has to be within 1 degree of the actual value, the relative humidity has to be within 5% of the actual value.”
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| The amount of power a power company needs or a city needs depends on the temperature. There are very strict parameters. For example, the temperature has to be ± 1° and the relative humidity has to be within 5% of the actual value. We get paid for what we get correct, which means we get penalized for the wrong value.
- Jatin Singh |
Weather insurance: Weather insurance is basically an insurance product where the failure depends on some weather parameters. For example, if the rainfall is above or below a particular limit say 120 mm in the monsoon months and the crop for which the insurance is structured out for is affected, then the farmer is paid for the loss.
Telecom companies: This is a relatively new trend. Explains Jatin Singh, “Telecom companies are now selling weather forecast to farmers. The problem faced by farmers is that they do not have reliable data from the IMD. So telecom companies buy data from us and sell it to the farmers.”
Media companies: This is an obvious sector. Media companies, be it electronic or print, are now buying weather data from private players due to the accuracy and convenience factor.
Commodity trading: Needless to say, commodity markets are predominantly dependent on weather. This is also turning out to be a huge opportunity area for private weather players.
FMCG: FMCG players such as soft drink companies need weather data to plan according to the demand. For example, WRL provides weather data to Pepsi. which helps the soft drink giant to gear up for the demand accordingly. Armed with the data, these companies are not only able to plan in advance, but also to save costs.
Besides, these, there are several other sectors that could be potential clients. According to Anuj, “I think there is a lot of opportunity in the travel business. The retail sector could also become a major consumer for managing their cold storage chain. A long-term temperature forecast could also be beneficial for FMCG companies.”
Another potential sector is construction. According to Jatin, “I think the construction sector can use this data effectively, especially in a city like Mumbai. Most of the construction work in India stops during the monsoons. A weather company can tell them during which part of the month there will be less rainfall so they can keep aside their stocks and do construction more effectively during monsoons. This will help them save costs.”
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written by mukesh .m.m, August 07, 2010
written by mukesh .m.m, August 07, 2010
All the great family's or rulers have run away to usa uk europe etc with the hope never to return.
Now that Dubai International Sea Port is been Established in the city if cochin all south india market will be pumped even L.N.G Liqufied natural Gas .K.R.L kochin refineries who is supplying the fossil fuel requremant of south india ,
We as indias know that when you deal with a malayali think 10 times .
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