ValueMax

Just got this mail from a friend in the US-truly inspiring-

“I happened to see this in passing at the backside of a Boeing newsletter few months back. Simply love the raw determination of the human spirit. What a privilege to belong to the same species!!”

“I’ve tried to make the men around me feel, as I do, that we embarked as pioneers upon a new science and industry in which our problems are so new and unusual that it behooves no one to dismiss any novel idea with the statement that “it can’t be done!”. Our job is to keep everlasting at research and experimentation, to adapt our laboratories to production as soon as possible, and to let no new improvement in flying and flying equipment pass us by.”

William E. Boeing, founder The Boeing Company, 1929

The much hyped release of Nano was a welcome change in these recession hit times. For once both the consumers and the manufacturers were speaking in highly positive tones.

It prompted a strange discussion at my house. My dad feels the euphoria around Nano is so much that its booking delivery process would command a premium. Something which has largely been unheard since Maruti days.

He tells me that the kind of excitement is similar to when Maruti had entered the Indian market – once a domain of only Fiat Ambassador. A friend also tells me that they had booked two Maruti cars in those days and sold the 2nd one at a almost 100% premium. Phew!

My dad insists that in this age of communication, the dream of NANO has already been sold to millions and not just in metros but in smaller towns also. Point taken. So, he says, this means that the # of people who would book will far exceed the manufacturing capacity (atleast in the first few months) and this would lead to a substantial waiting period- the trigger for market assigning a premium on Nano.

I had my doubts given the economic slowdown and lack of credit etc etc. But yday I went to drop some one at the station and during the time it took me to get my car out from the messy parking lot I could hear a group of auto-drivers talking excitedly about how they would use the Nano as their “taxi”- something I thought as a distant reality.

I have started to believe that Nano might end up commanding a premium in the market. But I am more interested to know what u think

Its been a not so great start to 2009 for India world over. The economic crisis just keeps getting worse.

I had last written about a how the slowdown could be the right time for cherrypicking. But the Satyam story has made me wonder if the same really applies to competitive industries in the service sector also.

Take the Satyam example: There are way too many options available to Satyam clients. They would get similar (if not better) standards of deliverables at better costs probably (given the slowdown and IT industry’s need to get more paying clients)

- Most big IT clients already have multiple vendors. So they would not have to start afresh but look at re-distributing business amongst the others

- Most clients will not be rewarded (enough) back home for the risk involved in continuing with Satyam- given that it has already earned the title of India’s Enron. So even with the new board and GoI pitching in, my sense is that most of them would want to make a quiet and slow exit.

- Satyam was not into cutting edge IPR generating work- which means that they are replacable with the highly documented processes etc.

- Service sectors like IT do not have much “assets” beyond people IPRs. With the scale of fraud being discovered at Satyam, this asset(people) will be highly undervalued by any suitor. Even if one ignores the Sr Mgmt and looks at the Project Mgr level- the indian job market is full of qualified and experienced techies looking for better avenues.

So why would any one want to pick up Satyam – a Co. without much assests, with huge and increasing liabilities? I tend to agree with Phaneesh’s point of view that window of opportunity to invest in Satyam is now gone- with each passing day it would be tougher to revive an organisation which is losing more than its gaining (since the scam discovery).

I dont spend too much time infront of the idiot box, but I have been a witness to the news blitzkrieg that Indian consumers are forced to live with. With so many news channels, i usually end up pressing the “Up channel” button almost 20 times before I get out of the “breaking news” zone.

I have never ceased to admire these guys coz I guess it takes a lot of practise to present most of these Breaking News with a straight face. Tell me how can you not laugh when you are on Live TV telling the world that there are aliens living under the sea- when you are talking about the Bermuda Triangle. The other commendable feature they have is “creativity”. One would expect, creativity to limited to departments like editing, presentation etc while referring to News- but I guess these truly creative folks have taken it to the “content” part of news- the only holy grail of this business.

They are no longer in the Business of “”breaking news”, they are in the Business of “Breaking the news”. All this used to be funny and I also indulged in the humor. But now the desperation of these channels to get new content has started affecting the common man.

The TRPs of most of the Breaking News channels has only been rising and its hard to explain why this is happening.Maybe the answer lies in the fact that most of the viewers are ill-informed and highly gullible. Why else would someone believe that the world was coming to an end with the CERN experiment and commit suicide in India?The IB ministry needs to take this outright ridiculing of journalism, little more seriously….

The flooding of Kosi has brought to fore the apparent lack of focus government after government has had towards Infrastructure development. Lemme explain why.

The Kosi it seems has been changing course every year that it flows above the danger mark- apparently due to high level of silt. The only water flow management in its entire course is a barrage in Nepal- which has become inaccessible to Indian Engineers.

I ask these simple Questions:

- How could we the fastest grpwing economy rely on a dam in Nepal to control floods that affect 20 Lakh people regularly. This year the scale is higher, but fact remains that Kosi has been flooding every year. If our people are affected by floods we need an instrument developed managed by us, to control the nature’s fury.

- The changing political conditions of Nepal, should have provided us enough more cues that we can no more continue to assesrt ourselves on our Himalayan neighbour.

- How can there be floods drought in the same district? As reported in Breaking News – about this distrcit in Maharastra.I spoke to a few villagers in western UP- they said “Saare nahar to angrezon ne banwaye the… unmein se bhi jaydatar band ho gaye hein”- Most of the canals were built by the Britishers and most of those also are now dysfunctional. Even if I discount what they are saying by 60%, the fact remains that in the eyes of the common man, the infrastructure growth has not been in line with expectations.

Look at the few achievements we are all proud of

- Golden Quadrilateral has added thousands of Kms of highways and it has surely reduced surface transportation delays BUT various mini projects are marred with controvesy over corruption and delays.

- Delhi Metro is now the preferred mode for many of us Dilliwallas BUT the traffic congestion has only increased in the Capital.

- We bagged the Venue for Common Wealth Games some want us to bid for Olympics also. But the reality is that we are no where close to providing the visitors with a facility which is par-excellence.I dont know why we have failed so miserably in Infrastructure, but the time to get our act together is now. Coz good infrastructure is the foundation for a thriving economy.

Surjeet Singh is your typical sardarji driving a taxi for yet another typical sardarji- Giani Singh. Gianiji has a fleet of around 40-45 cabs that are doing decent business (if fleet expansion rate is any indicator).This has been largely due to the fact that Giani enjoys access to a captive audience – he is the only “reliable” cab operator in my area.

Now it so happened that Surjeet paaji came to drop me to the airport yday somewhere during the long ride we started talking about how much he is paid, on what basis etc etc.

So here’s the strongmaths around the taxi business

Giani pays a salary of Rs 4000/- to Surjeet and all other drivers with an additional incentive of Rs 40/- per round trip. Surjeet manages to do 3 trips daily on an average – making his total monthly income around=Rs7600/-. 

Assuming each trip is for an average 20kms- it would give Giani a revenue of Rs 300/- with fuel costs of Rs 75/- , this gives a per trip margin of Rs 150/- (keeping scope for other expenses).So on an average Giani Singh takes home strongRs 18000/- per day/strong. Surjeet wants to be independent start his own taxi operations. I hope Surjeet knows what he is aspiring to do:

- A new indica or other vehicle will cost a minimum of Rs 350K on road. With little credit history, its tough for Surjeet to finance vehicle acquisition at a competitive rate

- Giani gets some steady business coz we can rely on him. People would not “trust”- a single cab service as the availability will definitely become a constraint. So even if Surjeet gets the car- how will he get customers

- Delhi doesnt have a healthy number of Black Yellow cabs plying within the city- which means that most Delhiites are not used to hailing a cab on the road. The only places that you get into a BY cab is at the airport/station etc. So Surjeet can hope to do routes to/from such places. Had he been in Mumbai- he could have gone solo overnight after getting the vehicle.

- Airport pre-paid cabs have to wait for 2 hours typically before getting a customer- here the ticket size is Rs 250/- and they can rarely manage a round trip. They pay-up Rs 10/- per trip to the Pre-Paid manager. At this rate Surjeet will be able to do 2-3 trips in a day earning him revenues of Rs 650/-.His take home after fuel etc would be Rs 450/-. which transaltes to Rs 13.5K per month- almost double of what he currently makes.BUT with the EMI’s that he would have to pay- this could be eroded to less than Rs 7K levels. Also with this – he would earn only on days that he is making trips. If he has no back-up, he doesnt earn the days he is not well or on vacation.

So how does Surjeet let the entrepenur bug bite him in Delhi? How does he get finance at an affordable rate? Should he wait for the “Nano” That will surely change the dynamics in his favor.

My suggestion to Surjeet was to go to Mumbai- but with Raj Thackeray picking up morcha against Northern outsiders, Surjeet declined that option rightaway. He wants to be in the city of Dilwalas i guess