Monday, December 26, 2011

Economics of renewable energy power plants

Economics of renewable energy power plants

Thursday, December 22, 2011

My artcile on "Developing Entrepreneurial Ecosystem in India" - published in Business Review India

It is a fact that India is home to some of the best known outsourcing service companies, which have created jobs for thousands of engineers and have fuelled the outbreak of a young middle-class working population. However it is also a fact that in today's world of fast emerging technology, where innovation, creativity and entrepreneurship are the buzz words - we as a society are seen as 'job-doers' and not 'job-creators'. The society and the economy, have supported and nurtured a working population, but have failed to create enough entrepreneurs. Rather the whole idea of entrepreneurship, till about a decade back, was mostly associated with family-run businesses. And others from non-business background, who tried to diverge in these unknown territories of no fixed income (read salary), were not looked up to.

But things have changed in the recent past and entrepreneurship has slowly become 'cool' in our part of the world. We now need an entrepreneurship ecosystem to keep the momentum going and benefit from the trend. Some positive steps have been taken. For instance the decision of IIT Mumbai to allow final year students a chance to re-appear in the regular placement process, even after two years of passing out from the college, and in case where the student tried but was not successful in making her venture work out.

So what exactly is an entrepreneurship ecosystem and who (and why) will be its elements? According to Daniel J. Isenberg, professor of management practice at Babson College and executive director of the Babson Entrepreneurship Ecosystem Project, entrepreneurs are most successful when they have access to the human, financial and professional resources they need, and operate in an environment in which government policies encourage and safeguard entrepreneurs. This network is described as the entrepreneurship ecosystem. He even terms this ecosystem as the 'holy grail' for federal governments, which stand to flourish from these entrepreneurs.

A proxy measure to understand where we as a country stand today, in terms of a developed ecosystem, is our ranking on the ease of doing business index. A higher ranking for a country indicates that starting and doing business there is easy and which could also mean that the entrepreneurship ecosystem is supportive. According to the World Bank's latest disclosed index rankings on July 2011, India stands at 132 (out of 183 nations). The country stands particularly low on two measures which are, dealing with construction permits and enforcing contracts. It is evident that we lack on various parameters and which means that we should try to improve. Improvement measures can be taken across three key facets, which are – institutional, policy and social support systems.

Institutional level measures: The previous point of the IIT Mumbai initiative is an excellent example of institutional level support. Globally some of the highly recognized universities have focused centers for developing and nurturing budding entrepreneurs. One of the most notable ones include the MIT Entrepreneurship Center, which was founded with the objective of commercializing technologies invented by MIT faculty and student labs. The centre has produced lots of success stories in the past and every year MIT graduates establish more than 200 companies. From inception till date the centre has been able to produce 25,800 active companies, creating employment for 33 lakh people! Another case in point is a non-profit organization SCORE, which is a resources partner for the U.S. Small Business Administration and provides free of cost mentoring & advisory services to entrepreneurs.

Policy level measures: Policy is a pretty wide word and can encompass such government actions that can lead to attracting and retaining more entrepreneurial talent in the country. This could mean fiscal benefits such as tax concessions, procedural ease in terms of guidelines and laws to be followed by a fresh startup and or other measures such as change in laws and business rules. A case in point here is the Startup Visa Act of 2011, which was introduced in March 2011, and which proposes amendment to the U.S. immigration law. This Act is primarily being supported by investors who fund startup companies across the globe and are therefore pitching for such immigration rules that instead of such startups being residing in other parts of the world, should permanently be moved to the US, thereby creating jobs and Intellectual Property rights.

Social support measures: And last but not the least we as a society need to promote entrepreneurship culture. We should try building some sort of a social support for the youngsters and others who are trying to break free, have ideas and the ability to take risks and try out new things. It is ok even if they fail; at least they would come out more enriched with an experience of running things firsthand and managing all aspects of a business. Forums like the TED can provide the necessary emotional support and guidance for our budding entrepreneurs. TED was started in 1984 as a conference to bring people together from Technology, Entertainment and Design, to discuss and share new business ideas and connect the ‘thinkers’ with the ‘doers’.

While some of these measures such as institutional support can be implemented pretty fast, others like policy and cultural support may take some more time. In the meanwhile it is great to see that entrepreneurship is slowly getting acceptance as an alternate career choice. The bottom-line here is that the country today needs more and more entrepreneurs who could create jobs and spearhead innovations in technology and business. After all entrepreneurial activity acts as an antibody for the growing economy.

Thursday, December 01, 2011

TechCrunch - Business & Controversy

In the web parlance, ‘TechCrunch’ is (was? Read full story ahead to know more) the Google for anyone associated with technology startup companies.
Ok, but what do they actually do? As per the company’s website “TechCrunch is a leading technology media property, dedicated to obsessively profiling startups, reviewing new internet products, and breaking tech news.” So, basically it is a one-stop shop (or rather cafĂ©) where fellow and wannabe entrepreneurs can meet, share and learn, while the investors can track and follow worthy business ideas. As of today, the company’s website, including its network sites, boasts of about 37 million page views per month, and regularly reaches out to more than 12 million subscribers. TechCrunch also hosts the popular startup event – Disrupt Series; and The Crunchies Award.
Forty-one year old Mr. Michael Arrington is the brain behind ‘TechCrunch’, which he founded on June 11, 2005. Michael, a Stanford Law graduate, practiced as a corporate and securities lawyer with a couple of law firms, followed by trying his hands on web-based startups, before hitting it big with what essentially what was his personal blog. Honest views, opinions and an ability to break news first became some of the success mantras for the blog. Michael was able to grow the spread by hiring the right kind of people, and allied services such as virtual and real meeting places for entrepreneurs. Soon TechCrunch grew to a stature that investors started relying on the site for taking investment decisions. In May 2008, the Time Magazine named Michael as one of the world’s 100 most influential people.  
Michael became the poster boy of success for the blogger community. He was famous for his straight from the heart comments. One of his famous quotes and inspiration for the startup guys was at his speech at the 2010 UC Berkeley Distinguished Innovator Lecture Series, where he told the students that - “the best thing in the world is to go to Harvard for a year and drop out. Everyone knows you were smart enough to get in.” And he proved it when he managed to sell TechCrunch to AOL for a handsome USD 30 million, in around September 2010.
However, there aren’t happy endings to all fairy tale stories.  Post sale to AOL, differences were reported in the editorial style and process followed by Michael till now, and the way AOL wanted to run the show. Meanwhile Michael announced his plans of starting a venture capital fund to invest in web startups, named “CrunchFund”, to which AOL agreed to invest in USD 10 million. This was taken skeptically by the media who hinted at a possible collusion whereby Michael and his TechCrunch team would propagate only such companies, in which CrunchFund has or would be investing.  Even people close to Michael, like contributing author Paul Carr strongly condemned the venture capital business idea, stating that it would hurt TechCrunch’s editorial credibility. The NY Times in its story (dated September 4, 2011) summed it up as – “If insiders can trade on the news they publish, readers may become an adjunct to a business that is less about public information than private gain. 
AOL, which some say was anyways waiting to take some action against Michael, did not let go off this opportunity. According to last news on the issue, it is evident that Michael was shown the doors by AOL management. He is now managing the fund and has also started a new blog – ‘Uncrunched’ & the millions of ardent followers are waiting to read him again, afresh!  

Public Private Partnerships: What and How?

Public Private Partnership (also referred to as ‘PPP’, P3) is a mutually agreed business relation between the government and one or more private owned companies, to deliver a public project. Typically under the PPP route, the government conceptualizes a particular project, decides on the risk and reward sharing mechanism between itself and the private company, followed by bid process for selection of such private partner. The project is often done through a Special Purpose Vehicle (SPV) route, where both the partners share investments.

From the days of World War II to about 1970s, governments across the globe had spend a significant amount of resources in creating public infrastructure services, such as roads, power plants, water distribution systems etc. Also by this time the notion that people at large should get these services for free – was slowly changing. Therefore new models for creation of large infrastructure projects were been analyzed, which would take some burden off from the governments as well as result in people paying a rational price for use of such services.

PPPs thus came into fashion. The novel idea behind a PPP is that such a partnership should bring the best of its partners. While the government’s role is seen as the one who provides for capital, use of assets, and responsibility for social and environmental concerns; the private company is expected to bring in efficiencies in the form of better project management, speedy and on-time delivery, and innovation in execution and operation.

PPP is today successfully tried in almost all of the developed and majority of the developing countries. International donor agencies, such as the World Bank, Asian Development Bank and the Japan Bank for International Cooperation have been the key proponents of PPP and its spread to the rest of the nations. The sectors / industries where by and large PPP projects have been widely used are:
· Roads and Highways
· Gas Pipelines
· Electricity Generation and Distribution
· Water Distribution and Treatment
· Stadiums

PPPs have got their share of failure stories as well. At some of the instances projects have gone completely off-scale due to differences between the government and the chosen private company. Often these differences arise from the deviation in return on investment expectations of the private company. However a well devised PPP project is worth its try as it helps in bringing benefits to the public at large.

For more on PPPs and Popular PPP Models, please see the link below:

Saturday, November 26, 2011

comparing startup culture...

Startups: Silicon Valley Vs. The Emerging World (source:

Editor’s Note: Omar Koudsi is a co-founder and CEO of Amman, Jordan-based Jeeran, the largest review site in the Middle East and North Africa. You can follow him on twitter here @omarfk
On my way to attending an Endeavor Summit this summer, I had the following conversation with a customs officer upon arriving in the U.S.:
Immigration officer: What do you do for a living?
Me: I work at a startup, and I’m here to meet people from my industry.
Immigration officer: Ok. How long have you been at your current job?
Me: We started around five years ago.
Immigration officer: Five years! And you still call yourself a startup?!
This interaction has stayed with me because it seems to me to be a great example of the discrepancy between the reality distortion field that is Silicon Valley — and the reality almost everywhere else. Even the immigration officer at the San Francisco airport was of the opinion that five years is too long for a company to consider itself startup.
Being from Jordan and having visited Silicon Valley on a number of occasions, this visit (along with others) continue to show how the realities of the Valley stand in stark contrast with what an emerging world founder, particularly in the Middle East and North Africa, face to start and scale a Web business.
I believe the lack of a well-developed ecosystem (funding, mentoring, risk culture, lawyers, human resources) puts the burden tenfold on the entrepreneur in the emerging world. In many cases, foreign entrepreneurs have to do ten times the lifting of an American startup — for a much longer period of time to boot — in order to succeed.
My company (Jeeran) was lucky to find a VC firm called IV Holdings that had emerged in 2006 — way before entrepreneurship became cool in our part of the world — and it changed everything. Of course, it still took us a whole year to close our first round of funding, and really, throughout that period, there wasn’t any negotiation of terms — it was all just pushing papers.
In the Middle East, few had done this kind of transaction before; we (founders, VC partners, lawyers, gov. departments) were all flying by the seats of our pants, figuring things out as they happened. Not to mention, before we were able to find a VC firm and secure our first round of funding, we had worked full-time on Jeeran for a full three years, bootstrapping, relying on what revenue we created, and additional generosity from our mom/brother/cousin investors. This is true for the majority of startups in the region.
But, back to my trip to Silicon Valley: I attended a workshop at Stanford University given by a well-known human resources expert on the best ways for startups to find top tier talent. One of the tips he gave us was to interview at least 10 people for each position before choosing the right candidate — to take your time and be selective.
I found it humorous, since we barely find a handful of people with enough expertise to make a difference, let alone 10 people lined for the database, UX, and product management jobs we (and so many others) are hiring for. Founders in the emerging world are mostly occupied with building-up talent as it comes along in bits and pieces, not recruiting it.
Like most startups, we wanted our team to feel ownership over what we were building, so we sought to create a stock option pool. We worked with the top lawyers in the region and it took us around eight months to have it ready. In the valley, I got the feedback that such paper work (term sheets, share holder agreements, etc) are template-based and get pushed along by administrative assistants.
Some of this much-sought-after legal framework is so popular they get published on Techcrunch! Of course, I forwarded this link to our legal counsel who found it quite useful.
I found it comforting that many founders in Europe and even the East Coast complain about many of the same issues: Lack of venture funding, lack of talent, and an ecosystem that penalizes risk takers. Of course, this situation has much improved for them and for us, but it made me feel less lonely when I hear tales of East Coast founders trying to convince Wall Street talent to join a startup. We still lack that kind of talent pool (thankfully I guess, right?) to recruit from, but clearly the cultural challenge of jumping ship to a startup is shared.
My team and I will continue to make pilgrimage to the valley and soak in experiences. We will happily put up with the mocking of how long it takes startups to shift to second gear for us to learn as much as we can.
However, here is an invite for the Valley to go out and see how the startups of the world are solving problems in ecosystems void of the many resources taken for granted by the Y Combinator-accelerated generation.

Thursday, November 10, 2011

Lost Winter in Mumbai

It’s almost mid-November and longings and anxiety for winter are hitting my nerves. Of course who doesn’t want to welcome cold with closed arms!

But for various reasons Mumbai is still as hot as possible. My list of culprits include global warming, population on planet earth (blame on the 1 minus seven billion - others), geography design which marks Mumbai not very far from the Tropic of Cancer. Anyways in my endeavor to not take things on face value and put a good fight, this time around I have decided to fight for my right to experience the cool weather. And therefore was on lookout for some innovative ways to keep my house cool. Below is a list of few unique methods, which I came across while researching on Google. I hope to benefit my FB friends and public in general from these.

1) Put a vessel filled with water under the curtains, such that the curtain cloth is in constant touch with the water. The lesser the density of fabric, the more will be the fluid flow. You can infact do experiments on various fabrics and then recall memories of engineering labs.

2) Keep a bowl of ice cubes under the ceiling fan. This will ensure that the circulated air gets cooled off and in-turn cools your home.

3) Don’t eat large quantities in one sitting. Eating more will lead to rise in body temperature, which is required to burn the food intake.

4) Before sleeping at night, slip one or two ice cubes between bed sheets. This will take away the discomfort completely.

5) Smart planning. Instead of work from home, go to office; go for shopping, watch the latest Bollywood 3D movie, go to galleries – during the hottest time of the day.

And don’t forget to tell me which method worked the best for you, along with my fees in lieu of this advice. After all I have to foot my air conditioner bill.

Bend in the Back - dimal performance of PFC stock

The Power Finance Corporation, also termed as the 'financial backbone of the Indian Power Sector' has come up with a weak Q2 performance for FY12. Net Profit is down by about 40%, from Rs. 41933.70 lacs for the quarter ending on 30-SEP-2011, as against Rs. 70083.74 lacs for the same quarter ending in last year.

The company has reported that this sudden drop is on account of forex losses, given the company did not have enough time to take action with a rapidly sliding rupee. While the same can be a one-off incident, reduction in share price has to be seen more closely. The second quarter results of most of the power sector scrips are not heartening. To top-up the gloom are the constant feed of news on mounting losses of the State Distribution Utilities. In such a scenario it is evident that if the State Discoms are not able to turn the coluor of their balance sheet, the whole sector and participant companies could go for a toss.

We need some quick fix solutions to the financial problems of the state companies.

Wednesday, November 09, 2011

Mumbai Metro One - Patronage questionable

Even before the start of the prestigous new infrastructure facility in the Mumbai suburban area - the Mumbai Metro One Project (Link 1 from Versova to Ghatkopar) - it seems the forecasted ridership/ patronage is under question.

This is because of the MMRDA's last minute planning with the Traffic Department over the issues of traffic jams on the Andheri Kurla Raod - which is expected once the metro is up and running. The Traffic Department has long tried to pull attention to the fact, that given the spacing of stations on the metro line (every 1 km) and naroow stretch of roads, it is expected that commuter traffic plying into and out of the metro will cause a huge traffic problem on the main road as well as artillery roads. Imagine a huge rush of autorickshaws which will line up in all directions from these metro stations. 

MMRDA's solution to this problem is to keep some sort of a control over the autorickshaws and to make them end/ start off from artillery roads, instead of from the Andheri Kurla road. While this may solve the traffic problem, the thing to be noted here is that the same then would not be comfortable to commuters. Say for example, if I have to travel from Powai to Andheri, I will have to go over the artillery road of Andheri Saki Vihar to reach the Saki Naka station of metro. This 3 km journey itself will take me a hell lot of time, given the rush of traffic on the artillery road. Instead of that a direct autorickshaw/ bus from Powai to Andheri via SEEPZ makes a lot more sense - both in terms of money as well as time.

To my knowledge the best utility of the metro is to those people who need to travel farther from Andheri (on the western line) and Ghatkopar (on the central line) via the Suburban Railways (i.e. Mumbai Locals).

Tuesday, November 08, 2011

Guide to Management PhD Applications

Wondering where to find information about the 'why' and 'how' of Management PhD admissions? Pl see the shared pdf - authored by Abhishek Nagaraj (Doctoral student at MIT), for an exhaustive guide on basics, do's and dont's of PhD applications, along with an insight on careers in academia.

Happy reading!
A Guide to Business PhD Applications

Sunday, November 06, 2011

Mass Market Hypocrisy & Economics

Case 1: Many people admire PG Woodhouse; if I fail to like his novels – there is something wrong in my understanding. Therefore, to hell with my likes, when in public, I am going to say that PG is my favorite author.

Case 2: I remember my father’s yearly bank audit closure parties, where we children were forced to watch some vintage cricket world cup series – how long and boring those were. IPL 20-20 is so much fun!

I am sure thoughts like these have cross many of us. Even if they haven’t, would appreciate if you read through my thoughts on the subject. Essentially the point I am trying to make is that a) one should respect every other individual’s choice and b) change is good and should be welcome. So what if some of us think that Chetan Bhagat’s writing is trash – there are a million fans who adore him. And these million people have a right of freedom to like/ dislike an author, just as we have. So what if my dad feels that cricket is no longer what it used to be – there is a new generation who just do not have time to watch a one-day match and is happy with the new format.

I agree that reaching to masses or ‘democratization’ reduces value – but that is true for anything. A mass product will never command premium. But the truth is that it is neither meant to and nor is it positioned in that way. This is simple economics. I am sure we experience this in our business; there are always some clients who will just not look beyond a Mckinsey or a BCG and then there are some who give others a try! Do I hear someone saying “…expert advice/ assistance has become much more affordable with many consulting firms around, however the true value of what is served to the client has reduced”

Wednesday, October 19, 2011

Coal shortage and Power crisis

Many parts of western & southern India were plunged into darkness over the last couple of weeks which resulted on account of lower generation at the power stations. By far the reason for lower generation has been attributed to a drastic shortfall of coal –primary fuel used by thermal power plants.

So who is at fault – the power generation company, which didn’t stock enough coal so as to tide over exigencies, OR the coal production companies, which failed to produce enough coal, OR may be the Indian Railways, who provide the necessary backbone for transportation of coal from mines to power stations. Let us try to understand and tick cross each of these possibilities.

Majority of power plants in India operate on a cost-plus basis, which means that the power companies detail out their expenditures and get the same approved from the Electricity Regulatory Commissions. The ERCs do so based on Terms & Conditions of Tariff Regulations, which provide a detailed account of expenditure limits. Under the said regulations, a generation company is allowed to include the costs for two months of coal stock under its working capital calculation. What this means is that, if a generation company stocks coal required for running its plants for two months, then the expenditure incurred in maintaining this stock is pass-through to the buyers, which is the Distribution companies.

However, in reality generation companies do not maintain this quantum of stock, for various reasons. Primarily the reason is attributed to delays in supply by the coal companies. Another reason is to lower the chances of coal wastage – either through theft, or poor maintenance, while the coal is sitting at the power plants.

This brings us to the next problem possibility, which is reduced production by the coal companies. A quick look at CIL production statistics reveal that the company has missed on three dimensions – (a) ability to ramp up coal production in-line with the growing demand, (b) ability to maintain production levels at the existing mines and secure them from factors such as flooding etc., and (c) ability to beneficiate low quality coal. While coal consumption has increased from 504 MT in FY 08 to 611 MT in FY 11 which is a 21% increase, the supply of coal has increased by only 16% over this period.

The third possibility which is reduced transportation by Indian Railways could be ruled out for the present crisis, based on its public information disclosure. The IR has maintained that there has been neither shortage of wagons nor any issues regarding derailment of tracks. In fact according to the IR their open wagons have been lying idle in the absence of any coal loading.

The problem therefore squarely lays on account of default by coal production companies. Government officials, industry experts and academia have talked a lot about solutions to this problem, including reforms in the coal sector. It is high time these words get converted into actions which could lead to tangible results. Till that time, it’s a wait and watch for consumers – in darkness.

Friday, October 14, 2011

of Karva Chauth and sacrifices.....

Though I hate to admit, but at times I really like the 'sati savitri' types bahu, who would go to any length to fulfill her duties for her family (here 'family' invariably means only the other side - i.e. husband and in-laws; wonder where and how does the ex-family completely goes out of picture post marriage). Let me be more precise. What I LIKE is - the costumes (sari, bangles, bindi etc.etc.), the festivities, food, home decor and so on. That is the reason why I really wanted to keep the Karva Chauth fast, today. I almost imagined myself keeping a day-long fast sans any food and water - and at the end of the fast getting a beautiful (read expensive) gift from hubby dear! I also took some notes on how to survive without these essentials from my friends. I tried watching some more saas-bahu serials to learn the do's and dont's.
But alas, a morning bed tea, served by my husband, was good enough for me to simply forgo these sacrifices and also the gifts. Afterall, where is the time to fast, when there is so little time to eat-drink-together:-)