Twenty years hence! 

I was just wondering how the world will look twenty years hence. There is a major change going on in the world called industry 4.0! What jobs will be available, and what businesses could lose out? It is difficult to tell, at the same time, it is not so difficult. Robotics, AI are two game changers which are already on the horizon for ordinary people, but for techies, these are already around for some time. Will there be any bloggers after twenty years? Yes, they will be there, but there is good chance that I will not be around.  

So here we go! 

  1. Call Centre operators 
    1. We have already seen the BOTS (Web Robot) operating 
    2. Many times when we talk to toll-free numbers with Amazon, Flipkart et al. we are talking to BOTS. They are trained to answer standard questions based on our identity and our discussion history. Their “brain” gets updated as we call more. In case we ask some information which they cannot answer, AI trains them to say “Could you hold on for a minute? I will transfer the call to my supervisor.” The supervisor could be a human being, giving support to 20/30 such BOTS. 
  2. Automobile drivers 
    1. Companies are going very strong in creating technology for driverless cars. Such vehicles are already plying in certain areas in the US. Amazon is already using driverless trucks to transport their goods. Google’s Waymo and GM are two companies that are way ahead of their competitors. Over a period, there is a good possibility that the requirement for drivers will go down drastically. 
  3. Accountants 
    1. AI and Blockchain technologies together are creating business solutions that do the work of charter accountants. The data entry and the checking are rule-based. The rules don’t change every day, but even if they change, there are methods which will take care of these changes. It could be one profession that could get replaced fast.
  4. Bank Tellers 
    1. All of us are observing this phenomenon for some time. ATM card proliferation is taking place exponentially. People can withdraw money from any ATM. But in future, it can so happen that you may not need to withdraw money. My son Sachin who lives in the US rarely has any cash with him. Most places he pays by credit card. On the petrol pumps, I have seen him paying by using the RFID device for more than ten years. In India, recently, RFID tags are introduced to pay the toll on highways.  
  5. Travel agents 
    1. Travel agents? What is that? I have been buying all my travel requirements on various websites. I don’t remember when I last purchased travel tickets from an agent. It includes bus journeys too!  
  6. Newspaper delivery guys 
    1. Internationally, people have reduced buying the newspapers drastically. The print volume has gone down so much that it is no more viable to print the newspaper. Small newspapers are slowly shutting shop, and the large ones will also follow suit. In India, we are still lucky that readership is still manageable. But the trend of people getting their news on TV and the Internet is already set in!  
  7. Journalists 
    1. When there are no newspapers, what is the need for conventional journalists? Everybody will be reporter in future. The news organisations will need to check the authenticity of the news items. But with vastly improved cell phone cameras, video proofs are available.  
  8. Telemarketers 
    1. Robots will replace the telemarketers, the same as in the case of call centre operators, with one human managing large number of robots.  
  9. Referees 
    1. What will the referees do in sports events? The vast number of cameras capture each action, including fouls, no-balls in cricket, shuttle falling outside court in badminton. These technologies are already there. The role of umpires and referees will be significantly reduced. 
  10.  Assembly line workers 
    1. We have observed this happening for quite some time. The robots have been doing a lot of things. The advantage of robots is they usually don’t make mistakes, and they have no mood changes. They are never on holiday or don’t take sick leave, suddenly. 

This list can go on and on. But I am also going to write about businesses closing down.  

  1. Petroleum Business
    1. Currently, this is one of the biggest businesses in the world. With the advent of electric vehicles, the requirement of these products will drastically reduce. Trials are already being done on electric aeroplanes and boats. These developments will reduce the petroleum product requirement further. The demand for EV’s also will be forced by the need for better environmental pollution control.  
  2. Coal 
    1. Coal business is going to go down over a period for the same reason, pollution. Non-conventional energy-producing methods like solar, wind and nuclear power are set to push aside coalbased energy production. Over a period, the coalbased power plants will have to shut down, along with that the coal mines. 
  3. Law business 
    1. It is already seen that AI can give law advice easily. IBM’s Watson has proven this. Law decisions are based on the laws and rules; it also is dependent on the previous interpretation of the law. AI can easily combine these twto advise customers.  
  4. Automobile servicing and repair business 
    1. As the electric vehicles are used in large numbers, the requirement for shops giving these services will come down in a big way. The IC engine cars have more than 2000 parts in the drive train. Whereas in the EV, the drive train has about 18 items. Only the electric motors have the moving parts. Hence, the repairs and maintenance work will be as good as zero in the drive train. 
    2. The IC engine drive train has parts that are manufactured by forging, casting, rolling and heat treatment processes. These processes form a large percentage of the primary engineering industry. These industries employ a vast number of people. As the requirement goes down, there will be no growth. There will be a big slump. There will be slump in the industry, making machines and machinery required for these core engineering businesses.  
  5. Cigarette  
    1. Now people have realised that cigarette smoking is injurious to health. It is not just a government slogan. Younger people have reduced smoking of tobacco products as well as their E equivalents. It is one industry that will go down, but it is good for the human race. Unfortunately, alcohol consumption does not show sign of reducing.   

What is the reason for writing the blog? Well, the writing is on the wall, but we fail to see it, many times. People who are in the process of joining the workforce should think before joining any industry. Seniors should advise young people based on the information shared.

The list is not exhaustive, and many more jobs and industries could end up on this list. It is a good idea to keep track of such information to avoid obsolescenceTake care! Keep your eyes and ears open!  

 

Active and Passive! 

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In any language, there are two voices. Active and passive. A simple example of the voices is “Pramod cooks the food” and The food is cooked by Pramod.” The active voice is about what the subject does, and in the passive voice, the focus is on the action. It is the same in our lives. Active people take control of things, and passive people wait for something to happen.  

I will share typical examples of passive people. 

  • What could I do? It started raining; hence I got late. Why did you not budget for some event that could delay you? 
  • Its not my fault. I followed a tip given by a friend and lost the money! Why did you not check if the advice was correct or the friend was knowledgeable?  
  • It’s not my fault. The management never trained me for the new technology. Did the management prevent you from learning new things? It’s you who has lost the job. 

We tend to blame the rain for the failures. Those with an active attitude take the reins of the situation in their hands. Years back, Sachin Tendulkar was failing to score well, by his standards. He was getting out caught in the slips or behind the wickets. Sachin practised and practised. Finally, in Australia, he could put his training in the real game. He scored 240 runs, and during that innings, he did not play a single shot on the off side which was getting him out early. Australia did their best to feed him deliveries on which he was getting out, but he played them defensively.  

When the passive mindset takes over, you say, “Oh! I can’t.” Yes, you can, you’re just not willing to pay the price. You’re not ready to do the work or spend the time. You’re not willing to do something hard. You’re not willing to sacrifice what’s needed. That sacrifice could be time and sometimes money. But one should look at the sacrifice as an investment. You get returns on something, only when you invest.  

The passive mindset is defined by an attitude, an assumption that life happens to you, and you’re not responsible. People with this mindset also say things like, “Why does this always happen to me?” The worst question that we can ask ourselves is “Why me?” We humans think selectively. When good things happen to us in our life, we say that it is because I am good, and I deserve it. But during failure, you are the same person. Instead of asking the question, “Why me,” we should try and analyse. Last month I did something which I had never done before, but I succeeded. Now, what did I do wrong? How can I correct it? We need to think and take corrective actions actively. We may not reach the goal in a couple of attempts. But our perseverance is going to pay. There is no point in hoping that the stars and constellations will finally help us in our endeavour. When you change your passive state of mind to active, you move forward.  

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When the language you use about things going on in your life is passive, you slowly convince yourself that nothing is your responsibility.It makes you feel good because it absolves you from liability. It means you don’t have to look inside yourself and change anything.  It means you’re not in control. Life feels easy. Things will happen whenever they happen.

But you can be in control of how you respond to the ups and downs of life. You’re in control of how you talk to yourself. An active attitude means ownership. You own your failures. A proactive mindset means you are responsible for the things you control. 

Ages back, I was working as the quality control manager in a foundry. One day our main transformer blew off. Our production came to a standstill. I am a trained metallurgist and did not know much about transformers. My boss called me said, “Take this car. Go get one replacement transformer at the earliest.” My work started from getting the specifications of the transformer and understanding the detailed meaning of the same. I drove out. I checked at various places. Finally, I located one vendor, but his transformer was being returned the next day. Next day, early morning, I went to the location with the vendor person, about 30 km from Pune. I arranged to get a truck and ensured that the transformer was within our factory premises within 18 hours. But I was sure that I would be able to arrange for the transformer. The doubt never came in my mind!  

Okay, I understand that you have done everything from your side. The cost of the solution is too high, and there could be some collateral damage. There could be many adverse points. But in that case, don’t give up! Talk to someone. Everyone has a mentor hidden somewhere. Talk to that mentor. In today’s times, information is more accessible with search engines around. In olden times, it was difficult to get information and data. Don’t become passive; don’t allow your active attitude to change.  

Your goal may be small or big. But reaching it is essential. Sometimes not achieving that goal may not have serious consequences. But if one gets into the habit of getting into passive mind-set, it can have effects over a period. Don’t fall in the trap!  

Next time you are trying to access the site, excuses.com think twice or better thrice! The site gives hundreds of thousands of excuses. The active frame of mind does not let you take that route. If you have an eight am important presentation, make sure you reach at 7.30 am, rain or no rain. If you have that chunk of money to invest, ask your friend. But why not study what he has said. Anybody can lose money in investments but don’t blame it on friends. Take an informed decision. Your boss did not promote you, don’t blame the boss or the luck of the draw. If you don’t get promoted, blame yourself.  

Napoleon always checked while selecting the Generals if they were lucky! But at the same time, he also checked if they were fighters. There is a classic example of waiting in the slowest lane on a toll plaza. The “lucky” ones almost always join the fastest line. Luck does play a part, but the lucky ones always review quickly from a distance which lane is moving the fastest. Then they join it.  

 

 

 

 

 

 

Win-Win situation!

In life, there are many things which need a bit of tweaking or thinking out of the box. By doing so, the situation sometimes improves by some percentage and sometimes drastically. Businesses or offices want their efficiency and profits to go up. Humans wish to have a better work-life balance. Many times, these things do not happen because organisations don’t want to experiment. Status Quo is always good!

Recently I came across a couple of articles. One of them is about a  proven system, and the other one has been tried only for one month.

Around 1995, in the state of Quebec in Canada, the state government started implementing a scheme. In Quebec, French is the first language. Like all other states in Canada, there are a lot of migrants in Quebec too.

But because of French being the primary language, many ladies remained unemployable. In addition to that, there was a problem with looking after the children. Quebec is the only state who came up with a great solution. Till 1995, about 15% of  Quebec ladies used to work.

The solution was interesting. The government started offering French tuition to people either a part-time course or a full-time course. Those attending the full-time course and who were required to keep their child in a creche were paid up to CAN $1100/ per month. The payment made to these ladies encouraged the ladies to attend courses. The number of ladies attending classes increased very fast. As they learnt French, they started becoming employable. But where is the win-win situation?

As the ladies started working, many of them got jobs; they started earning salaries. In Canada, there is a high income tax, and it starts from the base level; unlike in India, where the certain initial amount can be earned tax-free. With the French education scheme, now the % of ladies working has gone up to 80%. It indicates that including men and women, the number of people employed has gone up substantially. It also shows the business activity, and the economy size has also increased. Now the Win-Win situation. All this larger working population started paying income tax. What the government did was to spend money on people to make them employable, and the people are paying the money back to the government by way of income tax. It is now well documented that French tuition scheme has become a great success wherein both the government and people both are benefitted.  The government gets back the money Canada spent by way of taxes, so almost nothing goes out of their pocket.

Microsoft1

Another similar story I read recently about Microsoft, Japan. They wanted to implement a four-day week work for one month, and they declared that all employees would have five Friday’s off during that month with full pay. There were 2300 employees involved in this experiment under the name of “Work-Life Choice Challenge Summer 2019”.

The shortened week led to more efficient meetings, happier workers and boosted productivity by a staggering 40%, the company concluded at the end of the trial. As part of the program, the company had also planned to subsidise family vacations for employees up to ¥100,000 or the US $920.

In addition to the increased productivity, employees took 25% less time off during the trial and electricity use was down 23% in the office with the additional day off per week. Employees printed 59% fewer pages of paper during the trial. The vast majority of employees – 92% – said they liked the shorter week.

In 2018, New Zealand trust management company Perpetual Guardian trialled a four-day workweek over two months for its 240 staff members. Employees reported experiencing better work–life balance and improved focus in the office. Staff stress levels decreased by 7%.

During the last 15 to 20 years, with the advent of computers and cell phone, the culture of “always-connected” started. Blackberry made it even more complicated by bringing the corporate email on their devices. During the night, it was essential to embrace Blackberry rather than your spouse! The global companies operated 24/7 and night time washroom break turned into one-hour email exchange session. In short, the work-life balance went for a toss. The importance of the person in the organisation was based on whether he or she had a Blackberry! The situation worsened when all smartphones could easily do what Blackberry did and more! Blackberry has now become history, but it established the culture of 24/7 into 365 days!

Are humans physically and mentally designed to work in such a culture? The answer is plain, no! Medical science says that humans need to sleep eight hours every day to work efficiently. But with global companies typically having offices in the US, in Europe, in India and China/Japan/Hongkong area, interdependent work is being done 24 hrs a day. So, on a conference call, people would be talking at 8 am, 5 pm or 1 am from different time zones.  Such calls were routine during 2-3 days in a week. On weekends along with picnic hamper, battery-pack became an essential item!

Thank god the people have started understanding the effects of imbalance, though the progress in the right direction is slow. The result of such endless working, round the clock, throughout the year brought out a lot of family issues plus health issues. Sudden heart failures, stroke or nervous breakdowns were classic symptoms. Business and offices are to be run efficiently and for better profits. But was working 24/7, 365 days the solution?

The answer is no because the human body and mind cannot sustain such situations. The new life-style added travel requirements to increase. Now, people have the internet available on flights. Before this availability, people had at least some time to themselves away from the Internet!

The experiment in Microsoft Japan is a life-changing attempt to make life easy and less stressful for everybody. Every family has its things like quick picnics, getting repairs done at home, going to attend PTA’s (Parent-Teacher Association) in their children’s school. Maybe they want to go and see a game in which the child is taking part. Once a week you may wish to take your child for music class. Over the weekend you would like to meet your parents.

Living life is a mix of work, making money and many many other things. But if you do not get the time for anything else other than work, it is not worth it. Organisations have started realising this critical aspect of life. But global organisations have offices in all continents. So, there will be issues of synchronisation. But if there is a will, it is doable. Bajaj Auto has managed to do this synchronisation in their plants. All their plants are shut on Sundays!

Microsoft, Japan’s one-month experiment, has shown very encouraging results. If it is done in the long term across the company world over, the results may not be as good as they seem at one location. There could be contradictions; there could be difficulties!

But the feeling of having correct work-life is on the increase. I have been reading about millennials negotiate work from home facility, work hours to be put in weekly is also being discussed.

We can see that the Quebec system has helped people and state both in improving people’s life. New ways of doing work in businesses and offices are also being discussed. Such actions will lead to more happy people and happier world.

What will be the perfect method? There is nothing perfect in the world, but it is good that the discussions have started in the right directions. Let us hope that people and systems will begin thinking out of the box.

It is itself Win-Win situation as far as I am concerned.

Millennial Work-Life balance!

 

Workfromhome2

The above image is eutopian image of working from home!

In the last thirty years, Work-Life balance has gone for a toss! But there are new generation Millennials who are changing the thinking — a millennial is a person reaching young adulthood in the early 21st century.

Work-life balance is the lack of opposition between work and other life roles. It is the state of equilibrium in which demands of personal life, professional life, and family life are equal. Work–life balance consists of, but it is not limited to, flexible work arrangements that allow employees to carry out other life programs and practices.

The term ‘work–life balance’ is recent in origin, as it was first used in the UK and US in the late 1970s and 1980s, respectively. Work–life balance is a term commonly used to describe the balance that an individual working needs between time allocated for work and other aspects of life. Areas of life other than work–life can include personal interests, family and social or leisure activities. Technological advances have made it possible for work tasks to be accomplished faster due to the use of smartphones, email, video chat, and other technical software. These technology advances facilitate individuals to work without having a typical ‘9 to 5’ workday.

People who began working until the late 1980s were docile people and would accept all the rules and regulations of their workplace. Over a period of time, the demand for work and the employee time started going up and up. Through the 90s, the work graph started going up exponentially. Over a period, it became fashionable to be in office for ten to twelve hours a day, and later it became routine. Slowly the long working hours became the norm; going home at the regular time was jokingly called “half-day” leave.

These changes, plus long travel times, made work-life balance totally imbalanced. Competition in business and rat race amongst employees gave a different meaning to this imbalance. People were getting scared to take a couple of weeks of holiday with the fear that if work moved smoothly in their absence, they could become redundant. Such situations made life even more stressful.

I will share a couple of stories, which I may have shared in some other blogs before. A friend came to my house one evening and asked me if I could spend a couple of hrs with him. It was an emergency. We went out, and he said he was doing very well in his job, but his work-life balance was so disturbed that he did not feel like to going office even for one day. I suggested that he should resign. He did resign his job in a week and got an even better job but with better work-life balance.

Another friend went to the US for work for a couple of months. His daughter was unwell, and there was a significant repair work pending at home. One day we had gone to meet his wife. At that time, our friend called and told his wife that now he had to travel to Germany and he would be in Germany for three months for work. We did not know how to console his wife!

In the first story, the friend did not have a choice, but in the second story the friend was senior enough, and he could have decided to travel back home for a couple of weeks before going back again. Workaholic? Or Who cares?

But I am pleasantly surprised to read about the way millennials are looking at the situation these days. When they look for a job, they look for prospects, salary, benefits and flexible working hours. Flexible working hours are now becoming as important or even more important than the salary. Millennials look at the job as a part of life and not the central part of life.

Workfromhome1

Each human has the responsibilities of the family. It could be some repairs at home, Parents-teacher association meeting, helping ailing parents, supporting the spouse when the spouse has temporary additional work pressure. I also agree that these are also equally important aspects of life. Human should continue to enjoy professional work, but if the work is going to prevent the person from fulfilling other responsibilities or having a yearly holiday, something needs to be done.

We read of many examples where people accept a significant pay-cut to achieve work-life balance. If the money you are earning can never be used for enjoyment or support family responsibilities, what is the point in making that money? For many people, work has become an obsession, long hours and endless struggle to aspire to do better in job. It has caused burnout, unhappiness and gender inequity, as people struggle to find time for children or passions or  any sort of life besides what they do for a paycheck.

But increasingly, younger workers are pushing back. More of them expect and demand flexibility — paid leave for a new baby, generous vacation time, along with daily things, like the ability to work remotely, come in late or leave early, or make time for exercise or meditation. The rest of their lives happens on their phones, not tied to a specific place or time — why should work be any different?

Today’s young workers have been called lazy and entitled. Could they, instead, be among the first to understand the proper role of work in life — and end up redefining work for everyone else?

It’s still rare for companies to operate this way, and the obstacles are more significant than any company’s H.R. policies. Some older employees may think that new hires should suffer the way they did, and employers benefit from having always-on workers. Even those that are offering more flexibility might be doing it because current unemployment is so low in certain parts of the world, and they’re competing for workers, which could change if there is an economic downturn.

But such luxury is not possible for many people. People working on the shop-floor of the manufacturing industry, the police, the doctors and nurses, and many such workers cannot work from home whatever modern technology we invent. But the effect of millennials working for better and more flexibility will affect other sectors. Such cascading effect could make the life of workers better than what it is today.

Jack Maa of Alibaba had suggested to his workers to work 996. Nine to nine every day for six days a week. You may get a very high salary but when will you spend it? When will you rest? When will you have quality time with your family?

But the same Jack Maa has now suddenly changed his advice to work three hours a day four days a week.

https://tech.economictimes.indiatimes.com/news/corporate/jack-ma-says-12-hour-work-week-could-be-the-norm/70892513

With technological advances, this is possible in specific industries. Probably people are thinking in the right direction. I am quite sure that once people get real flexibility in work, they won’t mind working a few times even while they are on a holiday. It is going to be possible because your work tools are available to you, 24/7 at the tip of your fingers.

Imagine you are lying on a seashore surfing both on the sea waves and on the net! A vital customer calls you and requests you to resolve his critical issue. Maybe you will do it because your company is taking care of your flexibility needs. So why not go out of the way and help the client?

That day hopefully is not far and it will be Win-Win situation for everybody!

Deep Discounts or Deep Distress?

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I am as usual caught in a conundrum when I read some stories. On the 15th of August National Restaurant Association of India (NRAI) launched a logout campaign against the deep discount coupons that are offered by these five aggregators Zomato, EazyDinerNearbuyMagicPin and DineoutSince then, more than 2300 restaurants across the country de-listed themselves from these food apps claiming that “discount structure, terms and conditions, by the food tech companies are unjust and unsustainable.” The president of NRAI said that to stay competitive in the market, some aggregators give discount of buy one and get one free. Others have done the same thing differently; they have straight away offered a 50% discount, which means the same.  

The story does not end here. On particular Gold Card membership, such discounts are allowed on one itemBut our desi brain works interestingly. The people go to restaurant A and take starters- 50% discount. They go to another restaurant to take drinks- buy two get two free! Finally, they go to the third restaurant and order the main course- buy one get one free! Using this method, they get the whole meal at 50% discount which kills the business.   

The worst part of the whole thing is that the discounts are being borne by the restaurants and not the aggregators. The association wants these discounts to be removed so that customers get used to not getting high discounts. It is a sort of detox action that is essential, according to the association. It appears that both the sides have understood the problems created by deep discounts and they also know that it will take some time to reach normalcy and come out of the deep discount issue.  

You and I are naturally going to be unhappy with these changes. We have to now look for happy hours or special days to get good discounts. Now, these changes are going to take my outflow back to normal, which I do not like. But we should not forget that such gimmicks never work in the long term.  

I always felt as if I am an uneducated person, though I have run a small business for more than 35 years. Giant organisations like Amazon and Flipkart have been in the deep discount game for quite some time. The difference is that they give deep discounts from their pocket. For years, they offer deep discounts, give Prime memberships and so on. They keep on investing billions of dollars for years. Amazon has never made profits in the last twenty years. But they continue to invest in the business to get more and more customers all the time. Uber CEO has recently made a statement that Uber may never make profits. What is the business model of such companies? Jeff Bozos has become “poor” when he settled his divorce, and his wealth is at lowly US $ 65/ billions. He bought some time back Washington post for an all-cash deal of US $ 250/ million.  

Uneducated me does not understand the principles used in these businesses. Uber charges higher rates when demand is up. But I have seen that as a routine, they charge about 10 to 15 % more than an Auto Riksha in Pune. The price difference between an Auto Riksha and a car can be three lacs of rupees. Many Rikshas give mileage about 1.5 times more than the cars. 

On top of that, Uber takes 30% of the amount we pay to the driver. To me, the driver may break even, Uber’s figures show that they make losses. Other than making vehicles available quickly to us, are they running a charity organisation? Is it not similar to deep discounts offered by Zomato or Amazon?  Or for that matter, Oyo?

Venture capitalists, angel investors, put in their money in such companies. Venture capital is defined as capital invested in a project in which there is a substantial element of risk, typically a new or expanding business. I am sure that those who invest in such companies expect reasonable returns on their capital. By what I have described above, there are no returns, then why are the investments continued? Where is the source for such unlimited funds?  

There is no doubt that Amazon, Uber, Zomato are market disruptors. They have shown the world a new way of doing business, which even 25 years back did not exist. New methods, new ways of doing things make a lot of difference in day to day life. Consider AirbnbThe concept is so good that it is helping people all over the worldIt reduces the cost of travel and uses people’s assets which have been remaining idle.  

Amazon, WalmartJio are gamechanging companies which have made a big difference in our lives. But they are making these changes with their own money or at the cost of competitors. They are disrupting the market and making their competitors think; I am sure the competitors will come up with even newer ideas.  

But this deep discount business with own money or someone else’s money is not sustainable business model. I am not surprised that NRAI has revolted against it. I was talking to someone about these aggregators. It was felt that the aggregators probably sell the data of their customers to make money! When companies like Facebook have done it, what will stop the aggregators from selling data!  

Ultimately, market disruptors come with ideas and business models which were never seen before. But one thing will never changeSuch organisations have to make profits at some stage. Unless, of course, you are an Amazon or an Uber. But don’t forget that Amazon is the market leader in Cloud Computing business; so as a group, they make profitsBecoming Unicorn company (market value exceeding One Billion US $) is fine for publicity; it will help companies get more VC fundingBut if they don’t start making profits, such companies fall in the group of 95 % plus companies, which close down sometimes even without a whimper.  

 

Recession or Cyclic downturn?

The automotive sector in India is under significant stress. Sales are going down drastically in unprecedented numbers. It is a vast sector and has already started giving layoffs, having non-production days- a euphemism for plant closures. A large number of dealerships have cancelled their tie-ups as the business does not appear to be lucrative. On top of this, BS-VI norms will be starting from 1/4/2020, which will cause further stress as no BS-IV vehicle will be even registered from 1/4/2020.

More difficulties will come up during this year and maybe even next year. The reasons for this is that CAFÉ norms will come into the picture from 2022. There is already a discussion of auto companies going slow on investments, but statutory requirements are mandatory, and these companies cannot avoid them. BS-VI norms and CAFÉ norms will increase the prices of cars. One thing that never comes into the discussion is the sale of old vehicles. It is not that people are not buying cars. People suddenly don’t change their habits. But people become practical and smarter.

George Mathew

I will tell you what I mean. I read an article from Indian Express which was discussing the sales pattern in the industry in general. The data in the table is for two thousand plus companies. The table above shows the business figures for April-June quarter comparison of 2018 and 2019. Sales of AC’s are generally seasonal. But other items like TV’s, Microwaves have not shown any decline. Sales are almost normal and have only shown seasonal changes.

I want to write a disclaimer. I cannot “read” the financial data, and hence, I cannot analyse it too! But as a layman, I thought there is not much difference for these two years. The sales have gone up in 2019.  Operating margins have reduced slightly. Depreciation is quite high in 2019, indicating the investments done in the that year. Hence interest paid has gone up maybe due to investments in plant and machinery. Proportionately tax paid has gone down, and profit has gone down. These figures do not show any drastic changes happening in the market. Companies considered in this table exclude banking and finance companies.

Then why is the auto sector in distress? I have mentioned that people have become smarter and practical. In the last financial year, the total number of vehicles sold was large. But the sales of new cars have come down. There is a secondary market where people buy used cars. The total number of old vehicles sold was four lacs more than new cars. Why is this happening? Small cars like Alto are now sold more in three-tier towns. Young people in big cities want to buy bigger vehicles. I understand that a 3 to the 4-year-old big sedan is now available for the price of an Alto. The trend of buying used fancy cars is affecting the sale of new cars.

I am not arguing that there is no recession in the auto sector. But we should not forget that it is one of the most protected sectors in India. Customs duty on cars below US $ 40000/ is 60 % and above this value 100%. The used cars have a customs duty of 125%.  For various reasons, this sector has remained inefficient. After many international companies started coming to India and opened their factories in India, the auto sector had a tough time. Some Indian companies took 15 years to reach the quality levels of global companies. One company that followed a correct way of doing business is Bajaj Auto. They currently export 1.8 million motorcycles every year. It gives them a buffer when the local market sales dip!

Some of the reasons for the downturn could be that main barrier for transport vehicles like octroi has been removed. The action has speeded up the turnaround time of vehicles  substantially. The effect would be that the number of trucks needed to transport material would be less than those previously required. Another reason that is making rounds is that demonetisation effect causing the sales to drop. Is such a large industry dependent on cash? In the rural areas cash was being used to buy vehicles; even large SUV’s were bought using cash. If people had so much cash with them why did they not use bank instruments to pay? The answer is obvious. Not paying taxes honestly is a habit that does go away quickly.

What was the auto industry turnover 20 years back? How much has this industry grown? The auto industry has made decent profits all these years, so I am sure they have reserves. Pollution norms have been known to everybody, so no point in raising hue and cry about investments needed.

Any sector that is in stress always talks of alarming results of the recessionary trends in their business. Should the government give selective help to the stressed industry? Is such action fair to other sectors which are doing okay in their business? The financial stimulus can be a solution, but such money gets diverted from equally essential areas. We should not forget that high tariff on imported vehicles has helped the industry for a long time.

All the companies in the automotive sector are large organisations, and they have the wherewithal to overcome current tough times. Asking for a reduction in GST is a short-term major and is taking a myopic view of the situation. In the last couple of years, the government has been receiving feedback from business about GST. Government has already made changes for the benefit of both industry and the government. Making changes for a specific industry for a short duration is an incorrect way. The auto industry has been generating decent profit for the last few years. Some things have changed; some new variables have come into play. There are who experts can find a solution and suggest corrective actions. I am sure the industry will come out of it.

Raising the alarm, making statements like “It is the wake-up call for the Government of the day” does not solve issues. But the government help should be an exception but not a rule. There is an interesting story about General Motors and Chrysler. When they were in serious financial trouble, a decade ago, the senior executives of both companies were called to Washington DC for discussions. In the initial informal chat, they were asked if they reached Washington the previous night. The surprised executives said, “Oh, we landed only about 45 minutes back. We chartered a plane to come here.” The government official was aghast!

So where is the vendor conference this year? Italy, Las Vegas, Macau? How can you have the conference inside your factory? Cost cutting is for others. I have attended General Motors vendor conference once in Pune. It was at the Oxford club and there were at least six helicopters used by GM bosses to arrive at the venue! It is not a surprise that GM closed their shop in India.

Bricks and Mortar!

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Pyare Khan from Nagpur!

4G then 5G! One TB storage space and 100Mbps speed. VCs and Angel funding! Till very recently G was about gravity, Storage space Cubic Meters and speed was 100 kmph! The numbers have remained the same but suffixes, if I may call them, have changed. Yes and VCs were Vice Chancellors and the Angels you generally met after death!

In the sexy world of IT, VC, Angel funding the Ooomph is there. The real-life talks about loans, mortgages, illnesses, loss of jobs, and what have you. But we all forget one crucial thing, this is real life; the sexy side of life is more of a service industry. These services make bricks and mortar functions efficient, they create services which at some stage were not even thought possible. For example, Uber, Air BNB. Who would give his or her own house on rent to people unknown? The beauty is even after these people used the home, you never came in touch with them, ever. For that period your home was converted into a service apartment. There is one product which the IT industry has created which is not brick and mortar, the computer games. To add to this, unfortunately, there are virtual frieships instead of real ones.

https://indianexpress.com/article/india/auto-driver-to-iim-case-study-his-journey-on-uncharted-highway-5807065/

The story of Pyare Khan from Nagpur is shared in the above article. His brick and mortar story must be shared with all. He was born into a low-income family and started working at the age of eighteen by buying a bus. His business failed, and he sold the bus. Then he started driving an autorickshaw at the age of 21. He went to a bank and asked for a loan to buy a truck. The loan amount was Rs Eleven lacs. The amount was way above his level, with no way of providing any other collateral. But somehow the bank manager was convinced in the end and the rest, as they say, is history! Khan’s company’s current turnover is Rs 400 crores (or four billion Rupees). He uses his 125 trucks, plus 3000 other trucks ply under his company. A financial institution from Dubai is now offering him a loan of Rs. Eighty crores (Eight hundred million Rupees). As usual, when he had no money, getting a loan was extremely difficult, but now that his company is doing good, people on their own are offering the money. The funny part is that IIM, Ahemdabad selected his case and gave him first prize! It was chosen over all the other fancy startups funded by, who else, venture capitalists! Other participants were from all over the world. The beauty of the whole thing was that Khan was not even aware of what is IIM!

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Old Amrut Tulya Tea Vendor!

There is a similar story happening in Pune on a smaller scale. It started with a family called Yevale. They branded of all the things, ready to drink tea! In Pune, there has been a tradition of selling tea in shops called Amrut Tulya tea! (It means as good as nectar from heaven) Such tea houses are a conventionally low-cost shops which could be equivalent to Pubs, where people meet to gossip. Tea houses also serve select bakery items. Yevale family turned this business on its head. They started probably with a similar inexpensive shop but created a different business model. They kicked off with their first modern shop on 1st June 2017, and as on 17th October, 2018 have opened 30 th branch in Pune and around. All they serve is tea! They have their recipe perfected. They give franchises. Their monthly sales are now Rs twelve lacs or 1.2 million. Annual turnover is 14.4 million Rupees. They sell their tea in elegant small cups. The quantity they serve can be finished in about three large slurps — the same as the Expresso, which is even less quantity. I have paid Euros 2.25 for an Expresso in Turin! Look at the maths. They charge Rs ten for each cup and sell 120,000 cups of tea a month. Wow and wow!

New Yevale Amrut Tulya Outlet!

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Such businesses or enterprises are what can be called as Unofficial India Inc! Not many people know about them. The promoters have the zest and the verve to succeed. They don’t use laptops, generally don’t change their lifestyle! Such people simply start a business and keep on successfully running them. I do not know the percentages of success and failure in such enterprises. But the percentage is more than the “Startup” model of business, where the success rate is less than 1 %, but the hype is more than 100%!

How many examples can we discuss now? These are mostly in the so-called parallel economy! They don’t pay taxes; Oh come on, how many organised sector companies cheat on taxes. How many ditch the banks on loan repayment? No point in blaming smaller businesses on this matter. It will be a good idea to bring smaller establishments into GST and Income Tax net. Now with the computerisation, this linking is simple and easy to track.

I will share a few more such examples briefly. Near my home, there used to be one Vada-Pav vendor (Potato patty Sandwich). I used to buy a couple of these items once a while. So I got to know him. On asking him how many plates he sold, he was initially hesitant. But then he said that he sold 600 to 700 plates a day, and up to 1000 plates in a day on busy days. Each dish would cost Rs.12/. To eat two of them were mini-meals, and one was a snack or breakfast! One family ran a Kachori business in Kanpur, I think. Father, two sons and two employees ran the business. They could barely stand in the hole which they called their shop. Income tax department tracked them and found out that during the peak time of the day it took forty-five minutes to serve you, in regular times about twelve minutes, and in quiet phase about two minutes. After fifteen days they found out that their yearly income was about Rs eighty lacs. (Eight millions)

My point is, why are these so-called family businesses more successful. They do not know much about the business aspect; they do not get funding. They have no guidance. Whereas the Startups get financing, the folks are educated and polished. They are funded based on a rational business plan. I assume this because the VCs have their own experts to whet the plans. Based on the study, startups are funded. But most of these businesses don’t talk about brick and mortar stuff. The world runs on brick and mortar things. The IT stuff makes brick and mortar businesses better, more efficient. The Kachori Wala and Wada-Pav wala have good knowledge about the product they are making. If these businesses are run inefficiently, the profitability will be less; there can be more headaches and many businesses fail too! But businesses still run. So my question is why these types of companies are not funded by angel funders? Is it because it is not very attractive to discuss in parties? When the success rate in IT areas is so low, why not finance “Real” business? The only answer I can visualise is God Only Knows!