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.  

 

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Autonomous or Driverless Cars! (Part I)

 

For some time, I had in mind to read and write something about Autonomous or Driverless Cars! I started reading about these sometime back; I am really fascinated by the technology involved. From whatever little I have understood; I feel that these cars will have higher technology involvement compared to EVs. ( Electric Vehicles) Anyway, making the drivetrain in IC Engines is technology wise more complicated than the making EV drivetrain. (EV drivetrain might feel complex today because it is new) I will keep on sharing with you the information (not knowledge) I will acquire over time. My initial attempt will be a little scattered as there many things to understand and absorb.

A self-driving car (sometimes called an autonomous car or driverless car) is a vehicle that uses a combination of sensors, cameras, radar and artificial intelligence (AI) to travel between destinations without a human operator. To qualify to be called fully autonomous, a vehicle must be able to navigate without human intervention to a predetermined destination over roads that have not been adapted for its use.

The companies which are already in this field are Google’s Waymo, Apple, Volvo, General Motors, Tesla, Volkswagen, Nissan, to name a few! Many of these companies are NOT into car manufacture but are developing this technology as they have the wherewithal! As usual, who will end up at the top in the race only time can tell. There will be mergers and acquisitions. To my understanding, only Apple and Google have the money to manufacture the cars too! But I have my serious doubts if they will get into car making.

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The above graph is showing data from 10 companies. It shows the number of miles driven before the manual intervention is needed while driving autonomous cars. Waymo needed manual intervention after every eleven thousand miles, whereas Apple needed manual intervention after every 1.1 miles. It indicates that Waymo and GM Cruise are way ahead of others in this technology. It also shows the safety aspect too! If I have to buy a car, I will buy a car using Waymo technology.

Which other aspects need to be checked and discussed? To start with, I am going to deal with the type of automation that is available in these cars. I used to visualise that an autonomous car means there is no steering wheel, one sits in the car, punch the destination and start chatting with your flame. But, that is not what it is. There are five stages of automation.

  • Zero level starts with humans doing the driving.
  • Level 1 is an Advanced driver assistance system (ADAS) to aid the human driver with either steering, braking, or accelerating, though not simultaneously. ADAS includes rearview cameras and features like a vibrating seat warning to alert drivers when they drift out of the travelling lane. It means some automation starts at this stage. Currently, an automated clutch change system is available (not the Automatic-transmission) which changes gears based on the car speed, without human intervention. Clutch in the car is operated automatically, but there is no clutch pedal.
  • Level 2 is an ADAS that can steer and either brake or accelerate simultaneously while the driver remains fully aware behind the wheel and continues to act as the driver.
  • Level 3 is an automated driving system (ADS) that can perform all driving tasks under certain circumstances, such as parking the car. (Parking assist) In these circumstances, the human driver must be ready to re-take control and is still required to be the main driver of the vehicle.
  • Level 4 is an ADS that can perform all driving tasks and monitor the driving environment in certain circumstances. In those circumstances, the ADS is reliable enough that the human driver needn’t pay attention to driving.
  • Level 5 is the vehicle’s ADS that acts as a virtual chauffeur and does all the driving in all circumstances. The human occupants are passengers and are never expected to drive the car.

From the current information available the Level 5 is far away from reality. It is not about the autonomous system. But the new system will need changes in insurance policies and laws, legal aspects of driving and responsibilities in case of an accident.

Each of the companies has their vision for autonomous cars. I was surprised to find that Nissan Leaf, the Nissan EV is one of the leading Electric Vehicle, which also has added autonomous systems to some extent. What are those?

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This button is called de-stress button. When you press this during driving on the highway, it does the following things.

  • It allows you to set a distance between the car ahead of you.
  • If required it comes to a full stop
  • When the traffic restarts, it starts driving back on its own!
  • It keeps the car at the centre of the lane while driving, and this is also done when there is a smooth curve, controlling the speed if required.

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The picture above is E-pedal. You can theoretically accelerate and brake with the same pedal. You press it; it goes boom! You start reducing pressure, it starts braking. But there is brake pedal available too, just in case! Even on the hilly roads, one can drive with a single pedal, if required.

There are many such features on these cars, but we will discuss them over a period. How are autonomous vehicles going to change many things? What benefit will they offer to humanity?

First and foremost is that the number of accidents can reduce. Accidental deaths will come down over a period. But there will be many legal changes needed. Laws will have to be made and passed by the highest authorities.

Another technical change is that these cars will generate significant and vital data. This data will have to be stored and processed online many times. It will develop a new field of data science. How this will change the car driving is anybody’s guess. Will it eliminate the jobs of many drivers? Only time will tell. One thing it has done. One company in Pune, a multinational, has hired several hundred people to process the visual data captured during testing by autonomous vehicles. The data is treated and uploaded into the database. So, some new types of jobs will get generated.

One new problem could come up. Both husband and wife will be relatively less stressed when they reach home in autonomous cars. So, they will have enough energy to restart the argument which had to be stopped as both went to office! But on a serious note, life on roads will be simpler over a period.

Future of the Auto Industry!

I have been writing Auto Industry in general, and EVs in particular. I will now add driverless vehicles in the subject list in future! I had my career in the auto industry and have dealt with Tatas, Mahindras, Maruti, Bajaj, Eicher, and the gang. I had an idea the other day why not bring the blogs written by me together. So here I got my six blogs;  I combined and presented them in the Microsoft’s new presentation software Sway!  I request all of you to “See” these on Laptop or a PC! If you have Chromecast connected to your large TV, use it to see on the TV directly from the mobile phone. You will enjoy the presentation. Happy viewing or “seeing”!

The matter, of course, is worth reading too! I will keep on adding to this presentation as I write more blogs in the future!

I am not sure how the presentation link will work in this blog on WordPress. Hence, I have included the link in the communication.

I am giving the link for the presentation. If it does not work on clicking please copy, paste and view!

 

 

 

India Shining Silently!

Among the political upheavals, hyperbole things are changing in India, slowly but surely. There was a political slogan, India Shining,” sometime back. But India is silently shining. The surprising part is that the change is happening on the Engineering side of life. The engineering feats are not sexy like IT, where smart men and ladies market their achievements.  

I read a couple of news items today. I found them very interesting for a different reason. One of the articles was about railways, and the other was about DRDO. 

https://indianexpress.com/article/india/indian-railways-piyush-goyal-premium-trains-rajdhani-shtabadi-5796304/ 

I will talk about the railways one first. When we speak of railways, we visualise historical systems, dirty platforms, and bogeys. In general, we get to remember inefficiency everywhere. But this article shares details about how a 20-year-old problem was resolved by Railway Engineering arm. The problem was about LHB coaches which were put into service; these were imported from Germany. There was a problem of coaches shaking, giving jolts while braking or at a higher speed. Railway team found a solution locally. There were about five thousand coaches involved. They replaced the Center Buffer Couplers with new design couplers. They also found that the usual braking method also caused these jolts. Hence they asked the drivers to use regenerative/dynamic braking system when speeds were above 30 Km/hr. With a combination of these two, jumping teacups and jolts have become history. There were 5000 such coaches, but with proper project management, the work on all of them was completed in two years. These stories don’t come out with fancy celebrations; these projects were done as part of routine practice. Great story to make everyone proud. 

https://indianexpress.com/article/india/india-israel-spike-anti-tank-missiles-drdo-5796306/ 

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The news above is another silent development of a highly complex military requirement of anti-tank missiles. Initially, the order was placed with Israel, who had a fierce competition with the US. This order was placed in 2014 for 351 launching systems and 8000 plus missiles worth US $ 500/ millions. Indian organisation DRDO (Defense Research and Development Organisation) was also in the process of developing the missiles locally. After successful second stage testing at Ahmednagar, the government decided to cancel the contract with Israel and go ahead with DRDO under Make In India initiative. These weapons are highly sophisticated and use infrared technology which has been proven during testing in hightemperature regions of Rajasthan deserts. No fanfare, the sheer hard work is the key to such success stories. Again this is the story of excellent project management where DRDO will deliver all the systems by 2021 as per requirements of the army! Kudos to DRDO. 

At the end of the second world war, Japan and Germany had lost, and many of their factories and cities were destroyed. All the treaties that were signed ensured that they would not resurrect rapidly. But somehow these nations rose literally from ashes like the Phoenix bird! All this was achieved due to the dedication, will power to excel and love for the nation.  

India, as we know today, became one nation for the first time at the time of independence. With the diversity of people, religions, languages, cultures, it was like Europe or much more complicated. Getting people together itself has been the greatest achievement of the last century, though we do not realise this. India has another significant problem. Our diverse culture has been very mature and has an old history of thousands of years. So, specific thoughts and beliefs are ingrained very firmly in our minds. We take time to change. Added to this was the large population. That India has survived and prospered is a miracle by itself.  

Slowly, we have started to learn to keep the diversity at home and now work together with professional pride as a single proud nation. Reading the above stories gives great hope to me about our great nation and people.  

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The viaduct of Pune Metro!

There are many such stories which are known to us, and we have started taking things for granted. Metro railway is an institution built singlehandedly by the doyen of this technology E Sridharan. He was also instrumental in developing the Konkan railway system. The system was one of the most stringent projects to build because of the tricky mountainous terrain. What Sridharan did was a technological marvel, management marvel. All the projects handled by him were always completed on time.

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Konkan Railway Bridge on the river Panval

My classmate Shashikant Limaye was the chief engineer for bridges on the Konkan Railway project. Shown above is the bridge designed by him on the river Panval (Yes it is supposedly near my native place Panval, where I have never been!). This bridge is 80 meters high from the ground level. It is considered a significant technical achievement in the project. How do people like Sridharan achieve such things? Looking into the smallest of the details has ensured everything works like clockwork on these projects. There is an exciting story about Sridharan. As the Metro lines started becoming operational in Delhi, he would visit different sectors every day to begin his work. Where he would go was not known to anyone. As he entered the station, he would bend and check if there was dust on staircases and escalators by wiping with his hand. What was the result of this dedication? Delhi, Jaipur, Kochi, Bangalore, Chennai, Mumbai, Nagpur, Pune, Hyderabad, Lucknow are all having Metro lines or are in the process of installation. All projects have always been completed on time.  

These projects have proven that in India, we can do worldclass technical work and have excellent project management abilities. In the example of bogeys, do not forget that these bogeys were not in one place but spread all over India. The work was completed without hampering the regular services.  

We have been doing great things in Technology. ISRO has already proven that it is India’s showcase worldclass organisation. It competes and beats others from the world in quality, performance and equally importantly, costs! 

On the business side Reliance has done a fantastic job of creating world-class large business; they have proven the same again in their Jio venture too!

But somehow we are not able to go up the value chain in other areas where we can do it. I am talking about the IT industry. They started doing well in ’90 s of the last century with Y2K! They started making big money and started getting large service contracts. Such contracts led to making even more money. In 20 years, these companies became very large, and have so much money that they did not know what to do with that money. Recently they started buying back their own shares from the market. The buyback indicated that they had no plans for developing new skills and gaining expertise in more modern areas. They have still not shown the willingness to go up the value chain. They have the people, the money but lack the will! I sincerely hope that these companies invest some money, human resources, and efforts in creating world-class products! Don’t just become Billionaires; become proud owners of great products!  

 

 

 

EV Conundrum!

 

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I am back to my favourite topic, Electric Vehicles or EV! A couple of days back there was a meeting called by NITI Ayog to discuss and decide EV policy for two-wheelers, in India. I am going to write only about the Indian scenario. My observation is that the electric four-vehicle of similar specification as the IC engine costs almost double the price. Plus per charge range of these vehicles is about 110 km. The specs are not good enough for the car to be used for out of station travel. With these limitations, it is going to be challenging to sell such vehicles. But in two-wheelers, I have observed that the price of EV’s is comparable with IC engine version. Distance travelled using two-wheelers is much less compared to four-wheelers. In India, parking two-wheelers at home is manageable compared to four-wheelers.

There are many angles to this issues. First and foremost is the fuel. With limited petroleum product reserves, there is bound to be a tough situation for the whole world if no action is taken, we will have difficulties. Add to this a new dimension; the US has threatened India to stop buying oil from Iran or else! If the US is so much worried about the whole world vis a vis Iran, then they should sell Oil to India at the same price as sold by Iran and that too in Rupees! But the US can get away with anything in diplomacy.

Petroleum product based fuels are adding to pollution is a known fact. The whole world is trying to reduce pollution by tightening the pollution norms, but apparently, there are limitations of investments to achieve the goals. Again the US has opted out of the body which is trying to track pollution world over. Again, it is the act of a bully.

All the nations are trying to reduce pollution in their cities and India is also trying its best. NITI Ayog meeting was held for the same purpose. Four-wheelers are still miles away from reaching the balance between the price targets and the cost. As four-wheelers will be expensive, their sales will not match current sales volumes at a price expected today. The second most crucial aspect in India is the challenge of charging the car batteries. Majority of the cars in India are parked in public places. Many of them are parked on roads and streets. How to provide a facility to charge batteries for such vehicles? Do we provide charging points on roads like we have parking meters? I don’t think that is a practical way of doing it. Another issue is that fast charging techniques are coming up but are still not good enough. With such limitations, NITI Ayog is trying to put pressure on the two-wheeler segment.

As already discussed, EV’s in this segment will have a comparable price, and because of lesser parking issues, charging the batteries using home electrical outlets may be possible. Charging is manageable; costs are manageable, and the number of these vehicles produced is very high. The number of two and three-wheelers manufactured in the latest financial year is 30 million plus. Total of fuel used by these vehicles is massive.  If totally converted to EVs, there can be a significant impact on pollution.

There are two groups in this segment. First and the main is the group of established manufacturers like Honda, Hero and Bajaj. They are already developing EVs. The second segment is the startups who are in the process of developing EVs. They have no hangups and are trying to support the government. But the established ones have the issue of scaling up. NITI Ayog is insisting that by 2025, majority two-wheelers manufactured should be EV’s. The Giants have a vast experience in manufacturing and can visualise or foresee the issues. Startups really don’t have manufacturing expertise and experience. They probably do not understand the meaning of manufacturing 2.5 million vehicles a month.

Now here is a complicated situation. Established manufacturers have to keep on producing IC Engine vehicles and ramp up EV production. Tremendous efforts and money will be needed. Startups may know the EV technology but do not have the wherewithal to manufacture one hundred thousand vehicles a month. Selling these numbers without the right experience is going to be very tough. What about funding? They are solely dependent on financing by VCs. Today I read an article about VCs trying to go away from electric vehicle manufacturers, in China, as there are too many variables. These startups will never get bank funding. Don’t forget that even Tesla is still a VC funded company! They are already facing production bottlenecks, and their sales are going down!

Will Lithium producers make a cartel like the petroleum cartel? It is a million dollar question. India does not have Lithium reserves, but China has done brilliantly. They have taken controlling shares in many mines across the globe. Till foreseeable future, it looks like the Lithium, and to some extent, Cobalt is going to be the key elements. Their control will be the key to success.

https://www.mordorintelligence.com/industry-reports/india-lithium-ion-battery-market

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The cost of the battery pack was the US $1000/ kW-hr in 2010. In the year 2016, it came down $273. At this rate, the EV’s will become affordable over a period. By 2020 it is expected to be sub $200/. By 2026 the price is projected to be $100/. But till that time it is going to be a tricky question about change over. Those who can afford will buy the EV’s, but the mass production models will take some time to become affordable. In the countries, where parking of cars is an issue, it is difficult to predict what the solution will be.

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One pertinent point discussed by NITI Ayog was that if the pollution goes out of hand, then the courts will intervene. Once that happens then, the discussion will be between manufacturers and the courts. NITI Ayog suggested that some policy decisions need to be taken while interested parties are involved in the debate; it will enable both sides to come to an excellent resolution.

It is more of a chicken and egg situation. It is known that EVs are good for pollution management. On one side, nobody even knows which startups will even survive five years hence. Hence there is no point in putting your money on them. But the existing giants have their issues. They need to run their current business, which has its unique problems. They have to simultaneously scale down and scale up for old and new business. Hence they have shown their apprehension with the year 2025. How will they come out of this conundrum is anybody’s guess.

Are Electric buses the real solution for pollution control and to take people away from personal vehicles?

996 or else!

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You must be wondering if I am going to start writing blogs in the digital language of 010101. Don’t worry; I am not doing it! But what is this 996? Chinese companies now expect their employees to work from 9 to 9, all six days of the week! For workaholics that sounds like great news. But 996 workaholics, by choice, are rare. People do work longer hours. But can that be the reason enough to work 996, all the time? I don’t think so. No sane person can follow that schedule. If you work 9 to 9, all six days of the week, where do have time for family life, time for personal chores? Time for enjoyment and time for quick picnics. Spending time with spouse and children on the seventh day is out of the question because it is likely, that one will sleep it out on the seventh day! Below is the status of 996 people on Sunday!

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How has this come up? Competition? Dictatorship? Fear of losing the job? Unrealistic goals? Or probably it is a combination of all the factors. Add to this, for international companies, with headquarters in America, and offices in Germany, Israel, India and China. Working with colleagues in different continents can play havoc on the lives of the people. In any organisation, the work is done by different teams in collaboration with each other. Hence there is a need for telephonic meetings regularly. But does it mean that 996 should be the norm? How longer hours will complete the complex jobs shown below, more efficiently?

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Jack Ma, the big boss of the Chinese company Alibaba, says, “The 996 schedule – which means working 9 am to 9 pm, six days a week – is “a huge blessing that many companies and employees do not have the opportunity to have.” He further says that if you don’t work this way when you are young, when are you going to work hard? The question comes to mind what the definition of young is In a group of 100 people if 80 members are young and 20 are not so young, then can you have different timings for young and the not so young? He also feels that such a work regime has allowed Alibaba to become a giant on the world stage.

Why do we work? To win our bread and butter, to learn new things, to go ahead in our careers. How many of us are bothered about the last aspect? The main thing is to achieve, is to steadily get our bread and butter, to pay our bills on time. Educate the children and pass life peacefully. Not everybody is looking to become highly successful in life. Would such people be interested in 996? Would they be able to sustain 996?

I remember about a young engineering graduate who was in the US for his master’s degree, for a couple of years. He joined a company in Pune, where the atmosphere was not 996 but hectic. It was a group of smart engineers working to do some great technical work. Three months later, he went and met his boss and said, “I cannot work with such a smart group of people; probably this is not my taking.” Later he started playing bridge and made his career as a professional bridge player!

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Is 996 feasible in the long term? I don’t think so. There is murmur going on, “family or ICU?” The 996 types of lifestyles are bound to create issues — even our 9 to 6, five days a week lifestyle is against the fundamental requirement of the human body. Before the industrial revolution, our lifestyle was based on nature. Sunrise and Sunset would decide the daily routine. 9 to 6, five days a week lifestyle also involves travel, business dinners and late meetings. So even this lifestyle is hectic. What made Jack Ma think that 996 is sustainable in the long term, I would not know.

Following two paragraphs are taken from a webpage

https://hub.packtpub.com/developers-lives-matter-chinese-developers-protest-over-the-996-work-schedule-on-github/

Working long hours at a company, devoid of any work-life balance, is rife in China’s tech industry. Earlier this week on Tuesday, a Github user with the name “996icu” created a webpage that he shared on GitHub, to protest against the “996” work culture in Chinese tech companies.

The 99icu webpage mentions the Labor Law of the People’s Republic of China, according to which, an employer can ask its employees to work long hours due to needs of production or businesses. But, the work time to be prolonged should not exceed 36 hours a week. Also, as per the Labor Law, employees following the “996” work schedule should be paid 2.275 times of their base salary. However, this is not the case in reality, and Chinese employees following the 996 work rule rarely get paid that much.

These two paragraphs indicate what is happening at the ground level. Can the developers come together and fight the system? I doubt, and it may not be possible even in the US as well as in India. But probably breaking laws in China appears to be blatant. Companies are getting away without being prosecuted by the authorities. The latest information says that 996 will be replaced by 10107! Ten AM to 10 PM seven days a week.

I understand the aspect of profitability in business. But will 996 achieve those numbers? It is evident that people are continuing this out of fear, and also because of no immediate options available. Years back I had met one engineer from Wipro on a flight. He said that his job was quite laid back, but every day he felt like changing his job. After office, he took 2 to 3 ½ hours to reach home. In 996 and 10107 the commute time is not even considered. I read on the website that someone changed residence and moved into not a very decent home, to reduce commute time.

Many companies are not into 996 or 10107, yet. But the number of hours put in plus the commute time makes it terrible. If both husband and wife are working, then the practical solution will be to look for jobs in areas nearby and move residence near the workplace. I know of a couple whose total daily commute time is six hours daily, minimum. One of them has a health issue and is required to exercise daily. But this is not possible due to commute time.

The Chinese colloquial term for a developer is “码农. Its literal English translation is “code peasants” — not the most flattering or respectful way to call software engineers. I call them white-collar workers on the lines of blue-collar workers. Mr Anand Mahindra, Chairman of Mahindra group, had tweeted, “I feel as if I am a businessman from Dinosaur times.” He made this comment after he read a statement by Uber CEO that Uber will never become profitable! I have a run very small business all these years; I am also surprised that Amazon has never made any profits, ever! I am told that these are 996 companies!

Mr Naraynamurthy of Infosys had sent an email to all Infosys employees to make sure that they leave office on time. But his instructions have never been followed in the spirit! I have discussed with people working in larger companies, especially the coders. All of them have said that they can concentrate on their job for not more two hours at a time. If 996 culture is followed how much will be the real productivity is anybody’s guess.

996? 10107? To me, none of these makes sense but what is the option? We had apartheid! We had slavery! The only difference is that compensations are high in the new bondage! Hopefully, there will be an organised movement against these systems, so let us wait and see, fingers crossed!

End of the road for Diesel cars!

Maruti Suzuki declared today that they would not manufacture cars with diesel engines starting from 1st April 2020! That is the day on which BS 6 norms for pollution will be implemented in India. This time the government is very stringent, and it is declared that from this date, only the cars BS 6 norms will be registered. Forget the selling; there will be no registration of cars other than BS 6! It is a great thing that the government means business, now!

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But is this the beginning of the tumultuous scenario in the automobile domain? Is it a mini tsunami? Has this statement started indicating the way things would happen in the auto industry? All these years life was much more straightforward; introduce a new model, play around a bit with the price and periodically change pollution norms when government forces you. The smooth ride was the norm! But a statement by Maruti says that the cost of development of BS 6 compliant diesel engine and the cost of making the BS 6 engine will be so high that in the small car segment, customers may not be able to afford them. Currently, the price difference between petrol and diesel model of a car is around Rs. One Lac. They feel that this difference could be Rs.2/ lacs for BS 6 cars ( ten lacs is a Million). On a vehicle costing Rs. 5 to 6 lacs, difference of two lacs will be too much, and customers may not be able to afford these cars. For cars/SUV’s costing Rs.10/ lacs and above, though the difference will be similar, % increase would not be high. How this sector will perform from next financial year needs to be watched. For SUV (both mini/standard) good news is Maruti Brezza will not be sold; hence manufacturers will rush to pick up the market share up for grabs. Maruti, however, has left the option open for 1.5 L diesel engine cars, used in Brezza.

Diesel engine cost issue due to BS 6, was expected. Volvo has already declared that they will stop making diesel cars when the norms change from Euro 6 to Euro 7, because of the cost of development and the price of the vehicle. Compared to trucks, the number of cars sold is much higher hence a smaller number of diesel cars will be better from the pollution angle.

Why did people use small cars with diesel engines? The lower price of diesel was the main reason. These cars cost approximately Rs. One lacs, plus plus, more than petrol cars. If the usage of vehicles was not enough, then owning such a car was not cost effective. On top of this, diesel engines have periodic mandatory maintenance cost which petrol cars don’t have. In many cases, it was not viable to own a diesel engine car.

With the imminent entry of Electric Vehicles in large numbers, the market is expected to be shaken further. In the late ’90s of the last century, Toyota came up with Prius, their first Hybrid car. (For those new to this subject, a hybrid car is one which runs on petrol and battery combination; each manufacturer has its own combination of the technology) It was expected that Hybrid would be the future and Toyota was expected to be the leaders. Yes, they are still the leaders in Hybrids. But a maverick called Elon Musk decided to plunge into EV’s. General Motors had manufactured around 500 EV’s at the beginning of this century, but then what happened? Petroleum lobby made sure that this initiative was killed. A few years later GM scrapped the vehicles.

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Combination of Tesla’s efforts, cheaper battery sets (hopefully!) at some stage, fast charging technology are pushing humans towards EV’s. Range per charge still remains the primary concern. Add to this reduction in the price of solar systems is making cheaper fuel for the EV, the Electricity. Now, what is adding to making it more difficult for petroleum products further, are the pollution norms for diesel cars?

What will be the future of diesel engines in the car segment? In India, the overall car segment is under pressure. In the last financial year, four lac more old cars were sold than the number of new cars that were sold. It looks like more small vehicles are being sold in II and III tier cities. Will Maruti’s prediction about diesel engine cars affect thinking by other car manufacturers? Will they also go away from diesel engine cars? Only time will tell.

The current financial year is going to be very tricky for car manufacturers. Let me explain what is involved, as the last date on which the BS IV car will be allowed to be registered. That date is 31/3/2020. To achieve this target, they will have to attempt and sell BS VI models from 1/1/2020. To meet this date, they will be required to push in BS VI vehicles from 1/10/2019. During this transition period, there will be tricky scenarios. BS IV cars will be produced less and less, but customers may want to buy them, as these will be cheaper than BS VI models. There is a possibility that in certain areas there will be customers and no cars; in other areas, there will be cars but no customers. All unsold BS IV cars will have to be sent back to manufacturers for conversion to BS VI at a considerable cost. Predicting requirement from 1/10/2019 to 31/3/2020 is going to be a nightmare for sales teams and along with them the dealers. The trend of lower sales is going to add to the difficulties further.

Will everything be hunky dory after 1/4/2020? That is again a very tough question. To achieve better fuel efficiencies and to go away from petroleum products, there will be efforts to introduce hybrid cars. But except Toyota, nobody has real expertise in this area. The predicted numbers for 2030 are 30 % EV’s, 30% Hybrids and balance IC engine cars, mostly petrol and CNG version. Does it mean that it is a death knell to diesel cars?

Another prediction by Maruti is that for small EV’s, where numbers are high in the typical small car segment, the volumes can be tricky as the price could be between 9 to 12 Lacs. This price is based on battery packs being manufacture in India. Larger cars will cost much more, but the high-price segment is less sensitive to the price tag. How the volumes will be achieved in EV’s, will be difficult to predict. I have not even discussed the charging station infrastructure issues! In India, most cars are parked on the roads for the night, so how and when will the charging be done?

At least in India, there is a significant turmoil about where the car market will go? Will Maruti continue to lead the pack? Will others follow Maruti and go away from small diesel engine cars? Only time will tell.