Who is the worst? 

High seat to Jail! At whose cost?

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Recently we have seen a spate of financial defaults where the so-called giants in industry and business have financially played havoc. Mallya, Sahara Chief Subroto Roy, Unitech Chandras list goes on and on and on! Question came to my mind who is the worst of the lot? I missed on adding the name of our local hero from Pune D S Kulkarni, who has joined the elite list though not on that scale.

In such matters two major aspects need to be checked. Whose action has caused the problems to the health of banking & financial system, and whose action has caused the most damage to the livelihood of individuals besides the banking system? The first group which has caused the issues to banking system are led by Mallya. Before he could be “caught”, he managed to change ownership of companies and to my knowledge companies are running reasonably alright! It appears that both Mallya and the new management have managed to siphon money to tax free heavens. Mallya apparently has billions of dollars in his personal name and has managed to evade tax in many locations in the world. How to get money back from such people? Assets he created all over India have become tricky to dispose-off, now that these have become tainted assets. Same issue is there in case of Amby valley, near Pune, huge asset created by Roy!

How to decide who is the worst of the lot? My thought process tells me that those who have cheated individuals, many of them retired, who invested most of their life savings, are the worst culprits. By this test Mallya may appear to be a saint. No individual has launched any complaint against Mallya. By this logic other three appear to be major culprits. Roy and Chandra are in jail for some time, thanks to Supreme Court; has their families’ life style changed, no way! They have no money to return but have enough money to blow! Our friend D S Kulkarni’s family lives in rented flat! So sad! Not really, the flat is in Trump Tower in Pune with a rent Rs. 400,000/ per month! Extremely high by Indian standards. Mallya’s case is totally different. He moved to UK when there was no criminal case against him. So, when he entered UK, he was not “tainted”! The propah British law says that when Mallya entered Britain, he was not “tainted”. So procedures had to be followed, as he was not a fugitive when he entered Britain! British took their own sweet time to start the extradition processes. The Indian authorities are now tensed up and keeping their fingers crossed. In another similar case in Britain, the judge who will be handling Mallya’s case gave a decision that the concerned culprit will not be extradited, as jails in India are in extremely poor condition. Same logic may be applied in Mallya’s case!

I don’t have knowledge of various laws but my common sense tells me that such people’s factories shut down, businesses close down; the so-called owners are still having fun whether there is profit or loss.  The workers, financial institutes, and vendors are facing the main brunt. I remember when in Pune, Garware Nylons shut down, the loss was to the workers, vendors and banks! Garware’s have been moving around in their helicopters!

Why does this happen? How is this allowed to happen? Where is the lacuna? When any organization starts, it needs money; it gets money in the form of equity, loans and fixed deposits and working capital. The persons who start the company are also expected to put in the seed capital. Everything works quite all right in the initial phase. How business runs, depends on many factors some under control and some not under control. When people invest money in business as equity, it is a risk taken knowingly. When business does well people get dividend; and at some stage some investors liquidate their shares, based on share market variation and make their kill. But when the business does not perform well they are in for a loss. This is a known risk for investors. Same things happen in case of fixed deposits by people. Interests are paid on time, whenever requested deposits are refunded. Problems begin when businesses start floundering. Promoters, at this stage probably start treating FD’s as equity! If business conditions deteriorate further then the deposits become Ponzi schemes! Take deposits from someone promising high rate of interest and try to pay interest to older depositors. Vicious circle goes on and on and on till the court and Police cases start. Unfortunately for individuals, the first right on recovery from such organizations is with financial institutions!

In the meanwhile, the smart promoters have done something in between. They take deposit under the name of one company and transfer the money to their other businesses. This is done like hedging when intentions are not good . So, their other businesses run well. The assets and incomes made in these businesses are not in the name of original promoters of the main company. You don’t need to own a helicopter or a Mercedes to use it! 😃Holidays in cool climes continue because it is never done under parent company. Wealth is flaunted and social activities continue. I am by no means a socialist or a communist but what I have just explained is simply cheating. Small vendors, retired teachers, others are affected badly. This is what is happening in case of D S Kulkarni. He even has gumption to claim that his business started suffering when Lehman Brothers collapsed in 2008!

How do these people maintain their lifestyle even after they are in jail or court cases are on? Here is an example from building trade. It is pretty simple. Company A buys a plot of land. B, C, D and E are other companies from the group. The plot is finally purchased by E following the straight path via B/C/D. By the time plot is in possession of E its price maybe five times! This is loaded on the project to sell homes to us. A is the company who takes FD’s from people but income of A is meagre and this money is routed to “other” companies. A & E ownerships may have some connect but B, C, D are owned by other family members or are trusts. These companies will have high profits! Another way of making the killing is that when E sells a home either B/C/D gets say 3 % commission on each sell as they are “Sells Agents” for E! Got it.

What is the solution? Believe in market rumours! Smoke is seen only when there is fire! It is impossible to know which organization can go into difficult times. The moment you hear some story, withdraw money from such organizations. Don’t keep on hoping that they will come up again! If they do come up put your hard money with them again! After all it’s your money! My take is that those who put individuals in difficulty are worst of the lot!

Auto Industry 2040?

Auto Industry Circa 2040. where will it be?

WOW! MMG! DISCO! These could be names of some of the leading auto component industries in the year 2040! Why have I selected the year 2040? Simply because everyone is talking of this year for introduction of electric cars in a big way; from this year onwards, the real downward trend in manufacture and use of IC engines in the cars, as we know them today, will begin. I am simply assuming that the cars will be available, similar to the cars of today. Masses of cars will be driven by humans, they will have a steering wheel and a power plant/train to give them. They will have some form of braking, electrical system handling various functions, wheels and body with fuel storage area, air conditioning and so on! Things inside could be fancier with more and more entertainment, superior navigation abilities, drivers may become more stress free as cars systems will be able to understand many things and may take over some functions from humans. Internet of things (IOT) will allow things that are not even thought of today.

This is part of evolution of human race but this could be culmination of major change that is taking place currently. The “new” car industry is putting its toddler’s steps today. Evolution is nature as everything in this world is always evolving! Basic driver for these changes is computers and computer chips. The car industry will be using different chips and will capture lots of data data generated by various systems. This data will be in endless loop and will allow cars to function more and more efficiently.

What will be the difference in the cars of today and those in 2040? Today’s power plant, the Engine & Drive train will be replaced by Batteries and Motors. Today’s drive train, gear boxes etc will be just be not there. The exhaust system as is known today will be simply not be needed because there will be no IC engine, both Petrol and Diesel. Gear box and the whole system is really not needed because their function can easily be handled by Electric Motors. Even today, in electric cars, there is a single gear which reduces the RPM to what is needed to drive the car at allowed speeds!

There are many companies that are manufacturing the components that are discussed above. These components may become redundant over a period of time due to introduction of electric cars. Bosch, Denso, Continental, Valeo, Aisin Seiki are some of the major players that manufacture the cluster of these components. These companies together manufacture products worth US $200/ billions every year.  These products may comprise of 40% to 70% of their current turnover. The giants must be already studying the questions that have come to my mind. How are they handling these questions? I am sure it’s a tough call to all of them though they have the where withal and deep pockets to handle difficult situations. Some have started making navigation products, some are making parking assist, camera -related systems. But suddenly new names are being heard in these discussions as vendors. CISCO, NVIDIA are some of them. Some are direct vendors to car makers and some are vendors to components manufacturers.  Where is the real scope for new development and business? Battery packs, battery charging technology to increase per charge distance that the cars can travel today! All other developments that are computer related can also happen in IC engine cars too! TESLA is already building a giga factory for their Battery Packs! So will the “new” component business be taken over by Car Manufacturers? Suzuki, Toyota and Toshiba are coming together in India for big battery plant! What happens to smaller manufacturers of these components? Will they survive the major change? Will “WOW! MMG! DISCO!” replace them? Only time can tell.

In car making, after a long time, new name TESLA, started coming into prominence. TESLA came mainly for the new product offering. It appears that technology like fashion goes round! Till first two decades of last century, IC engine based transportation was not very popular. Trains used steam, cars used electric power plants; but battery technology could not catch with the then needs. Hence IC engine cars and trains became popular. From the existing car manufacturers, some are already manufacturing electric cars more than what TESLA is producing. On top of that they have a running profitable business producing IC engine cars. But one thing is for sure they have the humility and know where they lack. Look at what Volkswagen Brand CEO Deiss has to say about TESLA! 

VOLKSWAGEN brand CEO Diess has said that VW which manufactured 5,987,800 cars last year has to catch up with Tesla which produced 83922 cars last year. “Tesla belongs among the competitors which has abilities that we currently do not have,” Diess said in the interview with “Inside”, a publication for VW employees. Around half of Tesla’s engineers are software experts, while at VW’s core brand it is a much lower proportion, Diess said. Tesla has good electric motors, a fast charging network, autonomous driving technology, internet connectivity, and a new approach toward vehicle distribution. “This shows that we need to significantly improve. We can do this. We measure ourselves against Tesla quite deliberately. Our goal: Using our abilities not just to catch up, but even to overtake,” Diess drives an electric VW Golf.

 Current giants have ready infrastructure and eco system to make and sell millions of cars. They of course lack Electric car eco system as mentioned by Diess above. Their main struggle will be recharging stations for electric cars; but TESLA is also going face the same problem! The question arises if TESLA, a loss making company, a start-up, survive? Let’s look at the startups from the Silicon Valley and the west coast, who really made it big in computer industry sunrise era. Google, Facebook, Microsoft, Apple they all became very big with the products/services that never existed before. TESLA is pitted against the giants for making existing products where the main “driver” is only a different technology! That’s a huge disadvantage. Fighting against giants, who have woken up a bit late, like Mercedes, Honda BMW, Toyota, GM, Ford, Fiat, Hyundai is going to be very very tough for TESLA! Some of these giants are also going to suffer or may merge! My take,Continental TESLA may cease to exist  by 2040 or even earlier as it is known today! Takeover? Maybe! 

 

Empathy

Dictionary meaning of Empathy is the ability to understand and share the feelings of another. This is one of the most important facets of human personality. I am always amazed how human personality develops. A human may be born with good physique, good brains; these traits can come from ones gene pool; these facets can be further improved by consistent efforts. But what about empathy? Is a person born with empathy? Is empathy a physical trait? No it is definitely not. Empathy is considered a motivating factor for unselfish, prosocial behavior, whereas a lack of empathy is related to antisocial behavior.

Human intelligence is the sum total of IQ & EQ. Empathy is a key element of Emotional Intelligence, the link between self and others, because it is how we as individuals understand what others are experiencing as if we were feeling it ourselves. This is best described by the proverb “Never criticize a person unless you have walked in his shoes for one mile.”

At what stage in life a human being becomes an empathizer? Is it seen only in humans or also in animals? I feel that it is definitely seen in the pets like dogs and cats. Of the two, dogs are better empathizers as they express themselves more openly than cats. I have read about dolphins, chimpanzees also showing this trait. These things indicate that empathy is a trait related to brain activity.

Empathy is a skill that is gradually developed throughout life, and which improves, the more contact we have with the person with whom one empathizes. Accordingly, any knowledge gained about the emotions of the other, must be revisable in light of further information. Empathizers will find it easier to take the perspective of another person when they have experienced a similar situation. When I share my personal experiences below, I again wonder if what I am writing is correct.

I want to share a couple of examples of my own and a business story which give different facets of empathy.

This is about 13/14 years back. I was in the US with my son Sachin, my grandson, Suyash, was maybe around 4 yrs old. We went his school to see a performance by the kids for Halloween. We were requested go and wait in a hall. Kids were coming in parade like formation and were having great fun. Almost all the kids had come out but we could not see our grandson Suyash. He came in the end, pushing a child who was in a wheelchair. After the program I asked the teacher, “How do you decide who will push the chair? Do you request the children to take turns?” She said, “Yes, we do it that way, but Suyash insists that he wants to push the wheelchair every time!” She said, “Suyash is different child and has of great empathy!”

Recently at home my daughter Priya and our granddaughter Rhea were with us. Our daughter came back from the clinic. She was mentally very down with some professional event and she had a telephonic conversation with my wife Jaya before she came home. Rhea asked Jaya, “Is mumma unwell?” Jaya said “No, she is ok!” Rhea is 3 ½ years old. When Priya came home and Rhea told us, “See mumma is well, she is not crying!” Jaya suggested to Priya to have some food. Rhea went and sat next to Priya and fed her all the meal. All the time telling her, “Eat your food, you will feel well!” She made sure that Priya finished all the food. How do I explain empathy in a 3 1/2 year old child?

Now I am not able to understand both the kids, all of ¾ years of age and so much empathy within them! They have not seen the world, they have not seen the bad side of the world. How could they empathize? I am back to my question at what stage the empathy start? How does it kickstart? Are all ¾ old kids like this? It cannot be so as each individual is a different person. Is it then genetic? Does it come down to you when you are born as hereditary facet of your personality?

Now I am sharing one experience from business domain. There was a heading somewhere.

Mercedes-Benz, the car manufacturer, is no longer interested in achieving customer satisfaction.

That does not mean that customer experience is not important to Mercedes. Quite the opposite. It means that customer experience is so important that satisfaction is not enough. Instead, the company wants its customers to feel delighted by their experience with Mercedes.

The company’s president and CEO believe that engaging Mercedes employees is key to achieving that. For example, a recent company poll found that 70% of employees had never driven a Mercedes. They are now being given the opportunity to do so, so that they can better empathise with customers, and therefore engage with them more effectively.

I had a similar discussion years back when first “Indian” car was being developed. The key people involved in this development were all using Fiat & Ambassador cars in those days. I asked some one senior in the organization, when all the key persons were accustomed to quality of Fiat & Ambassador cars, how will they create a car to compete with Maruti Zen, the best car of those times. We all know the end result.

In our office we make software products. I tell all my colleagues we are NOT developing software but we are creating a solution for other people to help them to handle their own processes in correct and a very easy way. Unless we achieve that we are not going to sell our products.  We must walk in our Customers shoes for one mile to understand their needs.

Will the world be a better place if more people are able to empathize? Is there a threshold at which people start to empathize? Can there be formal training given to people to learn to empathize? Friends come with your views! Let’s make this world even a better place.