Sales pressure

I visited my bank for some work a few days ago and someone accosted me trying to sell me some mutual fund investment. I politely declined. Today, I received a call from someone else in my branch who wished to speak with me about investment opportunities. Needless to say, the conversation was starting to veer towards this same fund. If I dig a little deeper, I might find that this fund is focused on the 'transportation' sector and I suspect airlines fall squarely within the transport sector.

One would think that by now, my relationship manager at my bank would know that I am not interested in investing in anything but index funds at least for the time being.

However, just like a Smith & Wesson beats four aces, a sales target beats relationships.

Goin' 'lectric

India has witnessed a leapfrogging of technology at least once with our Mobile Telephony revolution skipping the landline entirely for most of the nation. We might be staring at another such opportunity vis-a-vis fossil fuels and clean energy. For myriad reasons, India has been unable to deliver grid power to a large percentage of the population. With Solar power and LED bulbs and a small battery, we can perhaps expend with the cost, and corruption, involved in stringing a lot of aluminium across a lot of steel.

With Solar Photo Voltaic Cells becoming ever more efficient and Lithium-ion batteries evolving at the rate they are, we are facing for the first time ever, the possibility that power generation and consumption do not need to be concurrent. If you have not yet watched Elon Musk speak at the launch of the Tesla Powerwall, you might want to do so now.

With Tesla declaring some interest in setting up a Gigafactory in India for manufacture of batteries, all it might take is a little nudge for us to be able to drop the shackles of fossil fuels entirely.

Airline IPO

Indigo's IPO has been in the news for a couple of days. An article in Business Standard proclaimed yesterday that on the first day the issue had been subscribed 86%. If you read the article through, you might notice that the blocks allocated to institutional investors have been oversubscribed and the blocks allocated for individual investors have been left almost completely unsubscribed.

Interestingly, the airline has reported a negative net worth on 30 June, after it paid out a dividend of Rs 1080 Crores to the founder promoters in FY 2015. Add that to the dividend paid out in FY 14 of Rs 377 Crores and the 1010 Crores of interim dividend declared for this year, and we come to a value of about 2400 Crores. Of the total IPO value of 3200 Crores, 1200 crores is new capital and the remaining issue is accounted for by sale of equity by the founders according to this article. The company has stated that it intends to use part of the IPO proceeds to retire about 1200 Crores of its 3900 Crores of debt. So the entire amount of new capital invested by folks like you and me and will be used to pay off one-third of the old debt.


To top things off, the company has clearly stated as part of disclosures for their IPO that "there can be no assurance that we will be able to achieve a positive net worth in the periods going forward. If this financial position (negative net worth) continues, it may be difficult or more expensive to obtain future financing or meet our liquidity needs."

Wait. What? Let me get this straight. If I understand this correctly, the capital markets in my country find it acceptable that I can start a company, take on a mountain of debt to buy new aircraft, place an order for another 430 aircraft, pay myself a dividend exceeding the total profits earned in the last few years and large enough to take the net worth of this company to a point below zero, then offer to sell the company to other investors while telling them that I give them no assurance that the company's net worth can turn positive again and also add for good measure, that it might be difficult to maintain the liquidity needs of the company.

Now that takes titanium cojones.
It is easy to see why the individual investors might want to stay away from this IPO. I wonder what the institutional investors are up to.

Oily business

I read this article on CNN.com yesterday about how Saudi Arabia could run out of cash in 5 years if Oil prices remain at current levels.

An interesting graphic in the article posits that break-even prices for oil are widely different for countries in the Middle East. Kuwait can break even if the price of oil is USD 49 per barrel and Qatar at USD 56. Saudi Arabia and Bahrain on the other hand have break even prices at USD 106 and USD 107 respectively. I did not realize that it could be so expensive to stick a straw into the earth and slurp out the black stuff. Admittedly, the break-even point refers to the price at which the budget will be balanced, not the cost of producing oil.

For all of Dubai's folly in the late noughties, one has to admire the foresight of Sheikh Rashid who worked hard to set up multiple different revenue streams beyond oil in preparation for the day the wells run dry. His Wikipedia page states that he once said, "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel." His quote reflected his concern that Dubai's oil, which was discovered in 1966 and which began production in 1969, would run out within a few generations. He therefore worked to develop the economy of Dubai so that it could survive after the end of oil production, and was a driving force behind a number of major infrastructure projects to promote Dubai as a regional hub for trade:

Saudi Arabia on the other hand has been producing precious little else, dates perhaps and exporting their hardline views to the neighbouring region. With a cost of production over a hundred dollars a barrel and a selling price of under forty, things are going to get interesting very soon. Saudi Arabia is said to have burned through USD 70 Billion of its reserves this year and is expected to reach a budget deficit of 20% of GDP. Its military spending in the same time period has grown to 17% of GDP.

Interesting time to be buying the largest private jets in the world and supporting wars in Yemen and Syria when your primary revenue stream is under pressure. Perhaps the rulers have been taking advice on how to live life from a flamboyant fat man in India who has been selling the family silver to finance his hobbies.

RIP - The incandescent bulb

I read in the news a couple of days ago that the government has already distributed 20 million (2 crore) LED bulbs and is planning to take this number to 770 million bulbs by 2018.

The bulbs cost about Rs 70 each taking the total cost so far to about 140 crores. At the 2 crore mark, the country is already saving some 7.3 million units (KWH) of power every day translating to about Rs. 1000 crore per annum. The peak power demand has dropped by about 700 MW; that is more than half the power generated at the Bhakra Nangal dam.

The bigger effect of this push for 7.3 million LED bulbs is that manufacturers like Philips are seriously considering Make in India.

Good show Mr. Modi.

Life without TV

I have gone almost two weeks without TV and I noticed something interesting this morning. I don't even glance at idiot box anymore. I have not yearned to sit in my favourite armchair and reach for the remote control. If someone were to move the TV from its current location in the family room to their bedroom, I think it would be days before I noticed.

This experiment has been far easier than I had anticipated, thanks in no small part to the Discovery Turbo Channel's decision to air cooking shows in place of Wheeler Dealers.

Convenience

I am amazed at how small a town Pune has become again, now that I can get around on 2 wheels. As traffic grew more and more congested over the last decade, I have been tiring of doing certain things that I now realize I actually cherish. Like meeting friends for Misal-Pav and chai at a shop in the congested old town. I have even gone visiting with some friends from college who I had fallen out of touch with. Going out for dinner in the last few years has almost always meant going to a place with valet parking and I have been accumulating things to do for the weekend, by which time genuinely enjoyable stuff became part of the dreaded 'chore-list'.

When I bought the bike, I thought it would be a novelty for a few days before I went back to the cage on 4 wheels. Now however, after having tasted the convenience of getting around, I think I might stick with the bike for more than recreation. Then again, I am still in the honeymoon period of the first few days with my new toy.

Kumbhakarna

I saw a message on someone's whatsapp where the sender suggested that while we idolized all the heroes in the Ramayana for their valour and gallantry, the only character who had his life sorted was Kumbhkarna.


I wonder how long people would be able to do nothing but eat and sleep. At what point does the need to truly live raise its head and cause people to seek meaningful work? Or is the need for meaningful work, like ambition, just another curse that keeps us from true happiness?

Tolerance for nonsense

For all of Modi's strengths, his inability or unwillingness to get the idiots to shut up or face some consequences has been baffling. The quantum of nonsense he is being subjected to for this lapse is now large enough to adversely affect progress and development of the country.

Wonder when we will see a break point in this tolerance and some of the action that we voted for.

Truth

When you try to add to the truth, you end up taking away from it.

Commute

I am beginning to get used to my motorcycle. So much so that I find myself reaching for the bike key more often than I look for the car key.

It is so much easier to swing a leg over the seat, thumb the starter and get to wherever one want to go.
No parking hassles is a big win in Pune today.

I am actually considering commuting to work on the bike. Will keep you posted.

Ride

I clocked 80 km in a single ride on my R3 a couple of days ago. I had forgotten how it felt - the wind in your face, the smooth revving engine, and the handle bars communicating every line in the surface of the road through your palm grips. They say (actually Jeremy Clarkson does) that among cars only Alfa Romeo makes the kind of steering wheels which chatter away to your fingers, telling you if the line on the road is painted in gloss or matt paint. Bikes just do it so naturally. And the fact that you are sitting on the engine lets your butt-dyno feel the surge of power as you rocket to 100 kmph before you can count 6 Mississippis. That is Porsche Boxster or Nissan 370Z territory.

Getting astride the bike, thumbing the starter, and feeling that engine fire up into a smooth hum was bliss. The engine on the R3 and is a rev-happy silky smooth motor, red-banding at a rather high 13500 RPM. Peak power is developed at 10500 and peak torque considerably lower in the rev range.

Ergonomics are perfect: everything falls nicely to hand; the clutch and brake levers, the pass flasher. Release the clutch lever and it moves from standstill with an urgency that is as smooth as it is vicious. I was at a traffic light with a BMW 3 series and he made the mistake of revving his engine as he glanced at me. The light turned green and the R3 smoked him. I can almost imagine him trying to explain to his companion why he was trying to accelerate so hard, "There was a motorcycle there I promise - but it's gone."

The Japanese have this so figured out.

Gear

So I joined a biker gang today. Before you start imagining burly guys with tattoos and handlebar mustaches, let me clarify that these folks are mostly IT geeks who have moved back from Silicon Valley and are just about hitting mid-life crisis. The group meets every weekend to grab a cuppa and swap war stories about their escapades. Being the newest entrant, I didn't have any stories to tell just yet, but I intend to fix that in a hurry.

The one thing that I have had impressed upon me is the importance of safety gear when one goes cruising on a motorcycle. I thought the helmet was it. Not even close. It appears that I need gloves, ideally with Kevlar lining on the palms so that if I drop the bike and go sliding my hands are one layer removed from becoming the braking surface. Then I need a jacket with ablative material, stuff that wears away and absorbs the energy of sliding across asphalt. One of the boffins at the meet explained it well. "Have you seen those Youtube videos where one of the Moto GP guys takes a fall at 100 mph but looks more disappointed than dead? That's thanks to the jackets with the ablative armour." All right. I definitely need that stuff. And motorcycling boots. I need those boots to protect my little toes.

How much does all of this set one back? Quite a damned bit, I don't mind telling you. The jackets with ablative armour start at 24000 and the boots worth their salt start at about 16000. The gloves start at about 2000 but the ones you really like are a lot dearer.

I thought kids were expensive. This motorcycling business seems to be more so.
Wait until your kids want to go motorcycling.

Helmets

I went shopping for a helmet a few days ago and came back amazed at the variety and price range available. Way back then, during my college days, helmets came in two flavours. Open face helmets which cost around Rs 300 at the time and full face helmets at around Rs 700.

Things have changed somewhat. I saw helmets priced at more than an entry level motorcycle. SHOEI helmets start at Rs 35,000 and go all the way up to a lakh of rupees.

Some of the features on these new-fangled helmets are almost science fiction. Most helmets now have vents you can open and close to control how much air you would like to have flowing over your scalp. Even the visors have evolved; with hydro-philic surfaces which stream rainwater off rapidly so there is no streaking. Dual visors are not uncommon; a clear visor for all time use and a polarized inner visor which you can lower at the click of a button.


Some of the fancier helmets have Bluetooth headsets built in, and some of these allow you and your pillion rider to chat with each other. More advanced versions allow you to chat with upto 12 riders in your group. And the best ones have a built in Heads-Up Display that can show you directions via Google maps and Google earth all while you keep your eyes on the road ahead. Yamaha is working with a Japanese helmet manufacturer on a helmet- bike interface so you won't ever need to glance at the dashboard when you are riding. The helmet will display speed, trip details and fuel levels on the helmet HUD.

Here's something I did not imagine I would ever say - I have to go now for I need to read the user manual before my ride tomorrow morning.

Motorbike

There are a couple of things I have not done since my college days. Riding a motorcycle is one of them and I have been missing it more than a little in the recent past. So despite concerns expressed by my significant other and suggestions from my daughter that my yearning for a motorcycle was probably just a manifestation of a mid-life crisis, I drove to a dealership a few days ago with chequebook in hand and had a sportbike delivered the same evening. I had to wait a few days for it to be registered and I could finally take it out for a spin this morning.

It has been an exhilarating experience and I am seriously considering commuting to work at least once a week on the new bike. My family believes I will grow out of the enthusiasm in a few days and my son is keeping a watchful eye on where I keep the key.

True what they say. Boys never really grow up; only their toys get more expensive.

Mars

Ever since man set foot on the moon, people have been imagining setting up colonies on the satellite and then on Mars. But the imaginative 60s gave way to the cold-war 70s and priorities changed.

But now, there appears to be a renewed interest in Mars. The United States, the EU and India have sent space missions to the red planet and there appears to be serious talk about setting up a colony there within the next ten or fifteen years. The discovery of flowing water on Mars has only added impetus to the discussion.

But isn't it possible that there is indeed indigenous life on Mars - no matter how primitive - perhaps just bacteria or other single celled organisms? If the answer to that question is a 'yes', then should we not leave Mars to the Martians?

What is humanity going for? We are fast approaching the time when we will have devastated one planet. Are we going after the second conquest now?

Do trees defy the law of conservation of mass

I noticed as I looked out of our balcony this morning, that one of our potted plants has grown over the years. I mean really grown, to the point that the volume of the plant now seems to far exceed the volume of the earth in the pot.

I have always imagined that when plants grow, they absorb 'stuff' from the earth and that the growth in mass of the plant must be compensated by an equal loss in the mass of the earth. This potted plant seems to be defying the law of conservation of mass; for the soil in the pot does not deplete as the plant grows.

Where is this magic growth coming from? Had to look it up and the answer was surprising.
Thank you Mr. Feynman.

The opportunity cost of watching TV

When we watch TV, we are not learning. We maintain the status quo. Worse, we watch ads and often buy stuff we don't need. I have decided to forego TV for a month and have installed a book-case next to my favorite TV-watching armchair. Will report on the success of this endeavour in a month.

The value of a second income source

I moved back from the US after having decided that a naukri was not for me. I had to try and make it out there in the big bad world on my own.

When I first started working on my current business idea, I knew that revenues in the consulting and data analytics space were going to be lumpy. I figured that my income needed to have two component streams: first, a relatively stable monthly stream that I could count on to pay for the bread and butter, and second the highly desirable but unpredictable high-revenue gigs - money for jam.

I started teaching on the weekends to pay the bills. My visit to a B School in Pune to ask for teaching work has been the best cold-call I have made in life, for it helped me find my calling.

Perhaps, more important, I have realized the value of a second source of income that is out of phase with economic cycles, for teaching is relatively recession proof too, while data analytics revenues are often in lock-step with economic cycles.

The difficulty of being human

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently and die gallantly. ~ Robert Heinlein

I caught myself wondering from reading that list, how Heinlein, a person born in 1907, came up with a list that has so well stood the test of time.


I read that list today and find it amazing that I have personally done all of those things; but for dying gallantly, which I do not intend to do before I try bungee jumping and sky diving. I haven't butchered a hog either.

Clearly, Heinlein was not a PhD or a post-Doc scholar - for the remaining part of that quote is: "Specialization is for insects."

Politics might be a dirty game but...

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors - Plato

Japanese cars have no character they say

I have always been a fan of Japanese cars in general and Mitsubishi cars in particular. I have never owned a Subaru, but if the BRZ (developed together with the Toyota GT86) were to become available in India, I can see myself queuing up outside the store with a sleeping bag.

When I mention this to my friends however, especially the NRI kind, I hear no end of, "Yes but Japanese cars have no character."

After having had to live with a VW Polo and now my other German car, I have finally experienced first hand that German cars do indeed have character. The thing is you see, these cars are gorgeous and they know it. They have attitude. They have personality. The audio system will give you sound when it pretty well damn pleases. And the navigation system has even more character; once the lady starts speaking, you cannot shut her up. I have heard an Alfa Romeo has even more character. Most cars have the boot release button near the driver door or driver's seat. On the Alfa 159, the boot release button is on the roof, where the sunroof controls would normally be. On the Renault Logan the power window switches are where the air-conditioner controls would normally be.

I have finally figured out what it means when someone says a car has character.
I think I will take dependability instead.

October Short

The opposite of success is not failure, but name dropping.

Digital Content and attention spans

I met a friend who had recently finished teaching a course at one of the premier B Schools in the country. He was lamenting that students would come to class unprepared; not having read the cases.

I have been teaching at B Schools for over a decade now and this is not a new phenomenon. An inverse relationship between the length of the assigned reading material and the number of students who come to class having actually read the material is not surprising. For the past few years, I have therefore relied primarily on what Harvard Business School classifies as brief cases, about 4 or 5 pages long.

What was surprising about my friend's experience was that he had assigned cases that were really short; only a page or two.

I wonder if Twitter has something to do with shortening attention spans. 

SA80 - The civil servant

I have been reading up on defense systems on www.janes.com and other websites when I chanced upon this hilarious piece. This page informs us that the lads in the British army used to call their SA-80 assault rifle the 'Civil Servant', for 'it doesn't work and it can't be fired'.

Location based functionality

I was reading a review of the newly launched BMW 7 series and some of the features in this new car are location based. The air-conditioning, for example switches automatically to re-circulation mode when the GPS system tells the car that it is entering a tunnel. The car will also recommend economy mode when the next petrol station is more than a certain distance away.

I had written some time ago about my fear that suppliers of weapons systems could transmit signals to our newly purchased defence equipment that could enable or disable certain functionality. I just realized that they probably do not even have to transmit such signals, for ostensibly, we could jam them or shield the equipment from radio waves. The software could already be built-in, with functionality activated based on location and perhaps even time of year or time of day.

With VW showing us what cheat software can do, we can now imagine weapon systems that function exceptionally well during testing and do what they please when out in the battlefield.

German Engineering - engineered elsewhere?

I have been thinking some more about my post where I wrote about the possibility that the software bugs in the infotainment system of my car might have been born closer to home.

Presuming that the reality is indeed so, the question that now moves into focus is this: Would it be fair for the marketing department of a reputed German company to sell their products with the tag line 'German Engineering' or some variant thereof, when some of the engineering design has been done offshore?

Exporting Jugaad

I took my car in to the dealership again yesterday to get the CD player repaired. They took off the center console, checked that the CD player was securely fastened in place and put the cover back on again and the CD player started working. On the one hand, I was happy that I did not have to wait for some parts to arrive from Germany; on the other hand, this process was worrisome because it now appears that our fix for old Windows 95 problems - to shut down the computer and start it up again, now seems to be applied even to mechanical devices.

I have been frustrated with the number of software bugs in the new car and I have made no secret about my disappointment about the current state of German Engineering.

On my drive home yesterday however, I had a sobering thought. What if the Germans have been outsourcing their software development for the infotainment system to India?

Does perfect portability of work also necessarily imply portability of work ethic too?

How different professions work for their money

Labourers earn their wages by using their muscles; engineers, their intellect; good teachers, their heart; venture capitalists, their intuition and investment bankers, their ability to exploit others.

Running out of new content?

I have noticed that there have been a surprisingly large number of remakes of old movies and TV series in the last few years. Man of Steel was a remake of the original Superman - and for novelty it combined the story lines of the Original Superman and Superman II. Battlestar Galactica has been re-imagined with new actors, newer model Cylons - but the same storyline. We have also had Star Trek being remade with TNG (The Next Generation) and Star Trek Voyager.

I realized that if you squint your eyes and look closely, there are more such - even though they pretend to not be remakes. The sitcom Big Bang Theory is this decade's remake of Friends. There are 3 guys and 3 gals. One of the guys is academically accomplished but socially inept. There is one girl who is rather goofy. They are all good friends with each other and seem to spend all of their time only with each other. By the same token, Friends was last decade's remake of Seinfeld which also has one reasonably accomplished guy, one goofy character and one strange guy and of course the mandatory pretty girl. And all them spend all their time only with each other.

It is quite a paradox that literacy and education levels have been growing across the world in the last 2 or 3 decades, and yet the world seems to be struggling to come up with new and novel content in the entertainment space.