It is raining……cases!

Monsoon is here.

Outside (our syndicate) it is raining water, and inside it is raining cases, assignments, and suggested readings! (f.y.i. syndicate is a study den allotted to each PGPX group; these essentially become PGPXers' "second home" as participants typically end up spending more than 8 hours in these study dens each day after classes preparing for next day’s lectures).

As Ahmedabad enjoys its first monsoon rain, our group is stuck with a retail case, an inventory management case, and a 20+ page corporate finance reading. In such “romantic” weather just outside the window, our D-Company (incidentally this is what we call our Group D) is discussing inventory strategy for part #4915082 in some nondescript trading house.

Who says life is fair?

The subsidy is blowing in the wind!

After witnessing the “almost magical” effect of generation-based subsidy in the solar energy sector, the ministry (MNRE) has announced a subsidy of 50 paise per unit on wind energy generation. Be it increasing crude prices or the drive to meet energy targets of the current 5-year plan period, the government has finally woken up to the fact that wind energy sector needs to be rescued from the pressure of increasing steel prices. Estimates suggest that per-MW cost of wind energy installation has climbed from Rs 450 million to Rs 650 million owing to spiralling steel prices.

The 10-year incentive, limited to grid-interactive systems with a minimum of 5MW installed capacity, will surely help independent power producers, especially companies with strong balance sheet (with no attraction to get into wind energy for 80% depreciation benefits) to jump into the wind energy game. Owing to this policy change, we may now see big names in wind energy.

Subsidy, though a “dirty” word in the current market-driven world, is welcome in the case of clean energy since it provides the much needed encouragement to the sector. Well I am not against the conventional energy systems, but haven’t we subsidized coal-based generation for decades? (through lower and controlled mining/transportation costs and sales price)

I am not sure if the government has “fallen in love” with clean energy over the past one year (first it was per-unit subsidy on solar generation, now it is subsidy on wind energy; and the biofuels policy is due over the next few weeks). I feel the government is just waking up to the changed energy scenario marked by increasing crude prices (and hence increasing oil subsidy), rising levels of pollution, climate change imperatives, and the general “cool” quotient attached with clean energy.

Nonetheless, the move is welcome. Let the subsidy blow in the wind!

Let us give Hybrid a real chance…

Wonderful news! Now (at least theoretically) we have an option to insulate ourselves from the ever-rising fuel prices. Honda has just launched its Civic Hybrid model, and Toyota is not too far behind (plans to launch its Prius model soon). Hybrid cars, which use both petrol engine and electric motor, are usually fuel efficient and have lower emission levels, making them environment-friendly.

These cars however may remain in the “showroom window” as the import duties on these imported kits is huge (114%), resulting in high on-the-road price. Honda Civic is pegged at Rs 2.15 million and Honda is likely to launch Prius at a similar price. It is in fact a chicken-and-egg story – the volumes will not be attractive enough till these manufacturers set up local plants, and the prices will not decrease till the volumes increase.

How can the government step-in and make this opportunity real?

In my view, reducing the customs duty on hybrid cars is an option, but the government is unlikely to oblige since it would like to keep large-engine cars as costly as possible. The government could however permit imports at a lower duty level to those companies that promise to manufacture such hybrid or fuel cell cars locally within a stipulated period of time.

Also, the government could explore imposing harder environmental norms for large-engine cars, thereby encouraging manufacturers to switch to cleaner fuels.

On a parallel note, the government should initiate discussions with local car manufacturers and urge them to start their own hybrid initiatives with a tight timeline. The government could also fund local R&D agencies to accelerate their initiatives in this area.

Whatever be the approach, the government cannot afford to remain a passive spectator on this issue.

The “Sardar” finally shows his grit!

The Sardar (don’t get me wrong; I mean the leader of the country) is on the right footing against the unreasonable Left. He has decided to show his grit, albeit at the end of the Congress term. As predicted by most political analyst, the Congress has decided to take on the Left this time around cause the stakes are not too high -- the elections are already due next year, and the worst that can happen is Nov-Dec polls.

I am glad PM Manmohan Singh is not bending backwards (like he did last year; see my earlier blog dated October 2007) despite fierce objections from the communists who prop up his government in the Parliament. It seems the PM wants to move forward on the deal before the G8 summit on July 7 when he meets President Bush.

I do not want to get into the technicalities of the deal. It has been done to death by the newspapers. This write-up is to celebrate the grit of our PM.

Can old rats learn new tricks?

Yes they can. I have personally witnessed 77 other rats figure the “how-to-survive-IIMA-PGPX-Term-I” trick out. Here is how IIM-A taught the trick:

- Locked rats in a cage (called PGPX) with trick contraptions (really complex; and “crazy-sounding” subjects)
- Showed them a really large chunk of cheese that they can have in the future (senior management jobs!)
- Rewarded them with little morsels of cheese each time they made a headway figuring out a trick (grades)
- Punished them with little dozes of electric current (quizzes)
- And did not let them rest till they figured the tricks out – threw cold water (cases) at them, kicked the cage (term exams), and threw more puzzles (incrementally harder) at them each time they figured a trick out.
And wow, there is a group of semi-trained rats (not necessarily smarter ones though!).

The first term of the course is finally over and we had exactly 4 hours of break before the group jumped into the bulky (what else do you call 25 kgs of books and case spirals) second term material.

Here are some statistics of what the group (of rats) went through in the last ten weeks: (compiled by a colleague rat who is great at figuring out really complex “mazes”)
- Worked on close to 75 cases
- Wrote 12 surprise quizzes/mid-term
- Wrote 9 full-length exams
- Attended 140 classes (each session – 75 minutes)
- Wrote/co-wrote/contributed to close to 50 reports/ submissions/PPTs

Don’t you think rats (real ones) are luckier?