Scooters Come Back

In the AGM held in August 2018, Rajiv Bajaj, the MD of Bajaj auto was subjected to the ever-present question by the shareholders. When will Bajaj scooters make a come back? This question had become a permanent fixture in the AGM’s held by the Pune based automobile maker. Every meeting, someone or the other would ask this question and Mr. Bajaj would duck or dodge the question. Not this time. This time he lost his cool and said “I will make scooters when Royal Enfield makes scooters”.

I will make Scooters when Royal Enfield makes Scooters.

Source

The less than composed outburst made headlines. We do like our punch lines don’t we? Mr. Bajaj went on to elaborate on his illustration. His point was, no one can be the best in all segments. Bajaj is the 4th largest manufacturer of the two wheelers in India. The two wheeler industry itself is a huge mix of scooters, motorbikes, sports bikes and elite high power bikes. His idea is, no one can be the champion in all the segments. OK, so does Bajaj lead in any segment? Yes, actually the three wheeler category is where Bajaj shines, the Autos. Its not the only segment; Bajaj Pulsar is a household name and one of the most selling two wheeler motorbikes in the country.

Two Wheeler Market

He also explained that the scooters first of all, are a small part of the two and three wheelers segment, secondly Honda is way ahead in the scooter game with the Honda Activa selling more than 100 thousand units a month.

So to sum up, he wasn’t interested in going into the scooter segment because:
a) He didn’t think the scooter segment was profitable enough – given that scooters sell for far less than a motorbike and that the margins are low, it seemed a low hanging fruit.
b) The scooter segment is already over crowded with Honda doing too well and TVS fighting hard to make the numbers.

Ok, now let us look at his statement. How can he say I will make scooters when Royal Enfield makes scooter? RE never made scooters, but Bajaj did, and Bajaj made great scooters. What the shareholders are asking is for a come back of the scooter. The Scooters of Bajaj are emotionally etched to the Indian psyche. A feel good factor, a nostalgia of the 90s and 80s when our fathers owned a scooter is what is making everyone ask for a scooter.

Bajaj Chetak

Emotions are not the only thing involved in the idea of bringing scooters back, of course its a huge risk. The scooters of Bajaj were of a different generation. Today’s scooters are mostly grearles automatics used by children or women who want to drive a lightweight, automatic two wheeler. Not the kind of Scooters that Bajaj made or the kind that the market wants Bajaj to bring back. Infact, except for LML in Punjab, today there are hardly any geared scooters in the Indian market today.

Aren’t there examples of old brands making a come back? The biggest example in the world is the Volkswagen Beetle. The 1938 model sold for nearly 40 before phasing out in the 70s. The model was so loved that when the company reintroduced it in 1998, it was an instant hit. It sold in the a hundred thousand units annually for nearly 10 years! Of course the numbers started falling again, and VW introduced a newer, more masculine version in 2011. The car has been out of fashion in 2019, but was one of the greatest comeback stories of the century.

Beetle 1998

Talking more closer to home, Royal Enfield itself is a comeback story. The chivalrous motorbike maker typically made motorbikes for the military and paramilitary forces, and very few owned the bike. It wasn’t till the 2000s that the bike started making a comeback. People wanted to own the Bullet, look tough and be part of the movement. The movement is still going strong and RE is making quite a buck.

So why can’t Bajaj bring back scooters? It’s not like Bajaj didn’t try its hand at selling the new generation gearless scooters. There was a model called Bajaj Kristal that was released in the 2000s. This model failed and with that Bajaj ended it’s venture into scooters. Which is really really sad.

Red Ocean

The fear of entering an already competitive market is not a sign of a good business. Its not just being risk averse, but its just throwing in your towel without getting into the ring.

The best example for this is the entry of TVS in the three wheeler market. The auto rickshaw market. Bajaj has historically owned this place. Even today Bajaj owns more than 50% of the market share in this segment. Yet TVS ventured into this market in the late 2000s and has since been chewing away market share. That is a sign of positivity and intent from a business that we as investors and shareholder look for. Why can’t Bajaj take cue from this move by TVS and take a change at entering the scooter market?

Three wheeler Market

The entry of TVS is not the only example of a new player entering an already saturated market. In the second decade of 2000, electric three wheelers have also come into the forray, and as a pleasant and path breaking news, the sales of electric three wheelers has for the first time surpassed the sales of petrol/diesel/CNG/LPG vehicles.

TVS Three Wheelers

As per data shared by the Society of Manufacturers of Electric Vehicles (SMEV), the apex lobby body for electric vehicles, sales of electric three-wheeler segment grew 21 percent during 2018-19 to 630,000 as against 520,000 sold in 2017-18. In 2018, sales of petrol, diesel and CNG-powered passenger three wheelers grew by just 10.6 percent to 572,400 units, compared to 517,400 units sold in 2017-18, according to data shared by the Society of Indian Automobile Manufacturers.

King of the Hill

As we already saw, Bajaj is not the king of the hill. It comes off as a distant 4th when it comes to manufacturing and sales of two wheelers in the country. The bike that is on top of things is the Pulsar, but even that has stiff competition with other street bikes like the TVS Apache and Honda CBR. So where then does Bajaj see the money to be so adamantly stuck only in the motorbike segment of this huge market?

The partnerships. KTM has been a famous name in the domestic motorbike segment. KTM RC 200 and KTM 390 have been selling hot on the streets of the bigger and smaller cities of India. KTM has a manufacturing and marketing partnership with Bajaj. Hence is eating off a fair slice of action. KTM is not the only partnership game of Bajaj; not so long back they had partnership with Kawasaki, and the most recent partnership they’ve announced is with Triumph. Do these partnerships mean Bajaj can make enough money and move up in the market share? Not likely.

Partnerships

Of the top 10 bike awaited bike launches in 2019-20 FY, there is just 1 Bajaj bike – the Bajaj Dominor 400, and 2 other bikes from partnerships. Yamaha is planning to launch 3, Hero, Aprilia and RE are planning to launch 1 bike each. So clearly, Bajaj isn’t really pushing too hard to make it to the top.

So what do we have now?

  1. Bajaj isn’t the best in motorbikes and isn’t likely to be anytime soon
  2. Entering an already saturated market is not unheard off
  3. Brands that have had a special place have made successful comebacks

Why after all this does Bajaj want to stay out of the scooter segment? Because its too little money? or because its too much work? or is it because it’s just not fashionable anymore? Its here that we must recall that Rajiv Bajaj is not the one who made the company.

This reminds me of a line from Psalm 37 –  The righteous shall inherit the land and dwell upon it forever. Unrelated question: Who’s the righteous one here? Rajiv Bajaj or the Scooter that we loved so much?

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Hoping Against Hope

On the auspicious day of the official FIFA world cup qualifier draw, we were hit with some bad news. Goal.com which is literally the mouthpiece of IMG Reliance and FSDL made a post speculating the exit of Bengaluru FC from their home ground of Sree Kanteerava Stadium in Bengaluru. It was a jolt! This had been our home since 2016 when we bid adieu to the smaller and astroturf-ed Bangalore Football Stadium since the number of fans had outgrown the 8000 seater.

Without going into details, lets understand that the news is not new that the Athletics Association of the Karnataka and Bengaluru FC have been fighting a turf battle in the Kanteerava. Now Kanteerava is a multipurpose stadium – most stadiums in India are. Hence the athletes of different track and field sports need the stadium to practice. When Bengaluru FC or BFC for cuteness, has a game coming up, it takes over the pitch for 2 to 3 days. This obviously creates problems for the athletes of other sports and hence the tiff. There has recently been a court order by the High Court of Karnataka that the stadium needs to be used only for athletics purpose and BFC needs to make way.

I just couldn’t believe it. Many couldn’t believe it. Staunch BFC supporters and fans were in disbelief and then in denial that we could actually lose our home. Many went on to create social media petitions and tried to spam or slander with FSDL, IMG reliance and even AIFF.

But inside, there was a hope that things will be fine and we will find a way through this. We will still play at our home ground. But what’s the reason behind this mad hope? Well nothing. The case as it stands doesn’t allow us to play in the Kanteerava stadium and the case will come up next for hearing only in October, by when our season would’ve already started. So why this hope? Why this belief of things are going to be good? I looked it up.

Apparently there is something called the Delusion of Reprieve. It was first found in Man’s Search for Meaning by Viktor E Frankl.

The condemned man, immediately before his execution, gets the illusion that he might be reprieved at the very last minute.

Source

Basically, Mad hope.

This struck me hard. Not the meaning of Delusion of Reprieve but the fact that it happens so frequently in our lives. The earliest of examples I can think of from my life is when we first moved to the suburbs. There were only 2 buses to our house and it took a full hour to make the round trip. We would wait at the school bus stop waiting for the bus. It would get late, real late and we would know the bus isn’t coming this hour, but yet we would stand there and turn up at every sound of a heavy vehicle.

It also happens on a bad day at poker. It happens to everyone that you’re just dealt with bad hands. You check, bet low and fold time and again, and yet you continue to play. Hoping, and earnestly believing that the next hand is going to be good.

The easiest example that everyone will be able to relate is school. Don’t we all remember the days when hoped against hope that a certain teacher wouldn’t turn up at school? they wouldn’t check the homework books? just before reaching school had the feeling that there would be a board saying its a holiday?

Today it happened again, even though we have a court order against us, and on us for quite some time so that it has actually sunk in, we still harbor a secret hope. Hope that at the last moment some miracle man would save us, some miracle from god would bend the rules for us.

The trickiest part of the this effect is actually defining it. Because in the bare sense, delusion of reprieve is nothing but hope. And isn’t hope a good thing? a virtue to possess? Yes it is, and the trick lies in understanding when Hope turns into the delusion of reprieve. I’m not gonna try to define the line of distinction as its a changing line based on context and relevance. It is different for all of us, but what’s important and the actual objective of this post is to realize there exists a place to which we can descend into, where hope becomes insanity. So the next time you are locked in a box, ask yourself, is this hope tingling under my skin or is it the insane delusion of reprieve leading me to the fool’s paradise?

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A Day in Paradise

Haven’t we always wondered what happens in the world? How do birds fly? What makes it rain? What’s the need of a catch basin? OK pause. Judging by the desperate nature of the examples, you would’ve figured that this is an unwanted intro to something completely different. You’re not all that wrong.

Like the questions, we also have one burning question inside us. How are laws made? The easy answer is: we as people elect our representatives through elections, these representatives come up with ideas that could improve our lives. Once an elected representative (most often but not always is a part of the government in power) comes up with something, he/she then tables (floats/pitches etc) the idea in the parliament, where the rest of the representatives (both from the govt and opposition) take an objective look at it, study it and come up with questions and amendments to the proposed idea. Sometimes this results in lengthy debates, setting up on committees for further studies and finally when everyone is satisfied with the amount of debating, the proposal – also called a bill is subjected to a vote and if the bill passes the vote, then does the idea become a law? Well not exactly, but this is the first step – Ok what are the other steps then? We’ll take that up some other day – but just to remind you, this was in your secondary school civics text books.

So, what is this blog about?

This blog is about taking a look at whether it is really all that simple. Do laws just get ‘tabled’ in the parliament, debated upon and passed into being laws or does something else happen? Let’s look at one day – hence the cheesy title – A Day in Paradise. For our purpose, I’ve taken up 4th July 2019 as a case for our study. Now let’s dive in – there will be technical terms and ‘governmental’ or ‘parliamentary’ jargon what we’ll try to define in simple terms as we move along.

Business

Business in our terms means agenda. It is the list of activities that are planned for a day’s work in the parliament. The Business is generally published 2 days in advance and in case of revisions, a revised List of Business is published and shared with the members of the parliament. I’m not sure if all the ministers coming to the parliament go through this before coming but its published as a matter of practice and standards.

Here’s the gist of what was going to be the business of the day for 4th July 2019: But first lets just understand what the different things mean

  1. Questions
    • Any questions to be asked of any member of parliament – these needs to separately listed and made available to the said member of parliament so as to be able to prepare and answer the question.
  2. Papers to be laid on the table
    • These are basically reports or notifications that any member of parliament wants to bring to the notice of the parliament. Once a paper is placed on the table, it may be brought up in discussions in the parliament (also called the house) or in general cases it is just a point of information for the house. Eg: certain XYZ Report has been produced by the ministry of oil and gas based on a study done on all oil refineries on the east coast of India.
  3. Messages:
    • Messages from either of the houses to each other or from the different state heads or the president that needs to be relayed in the parliament.
  4. Statements
    • Ministers or committee members can raise a request to make a statement in the parliament, these requests are taken by the speaker and based on merits and discretion provided a slot to make the statement.
  5. Motions:
    • Basically a topic or a line of thought that any member of parliament wants to bring out in the house and start a debate and discussion or come to consensus about a past discussion or debate.
  6. Resolutions:
    • It is a kind of coming to a decision about a certain topic, or bill or business of the house. Best explained with an example. The Finance minister can move to bring a resolution on changing the Duty on say computers from 10% to 20%. Now this isn’t a law or something that will amend a law, but it is something of importance to the nation and hence needs to get an approval from the parliament. Hence the minister will move for a resolution and the house will vote aye or nay for or against the resolution.
  7. Legislative Business
    • The thing that we thought was the main business of the parliament – making laws. These are basically laws and bills that are not yet laws that a minister may bring up for creation or amendment. These bills once brought up can either be taken up for debate and discussion or be brought up for the vote.
  8. Matters under rule 377
    • Matters of business that don’t fall into any of the other mentioned categories

Now the table above talks numbers, but what are the questions raised? Are any of them really really important to the nation and how did the concerned member/minister respond to the question? What are  the messages replayed in house? What were the motions submitted? And was there a debate on the said motion? How was the bill passes? Was there a debate? The things we see on TV, the ruckus and commotion, can we capture that? Well truth be told, all the commotion and ruckus is also captured and is there for everyone to see.

For starters, the happenings in the parliament are all on record. Secondly most of it is video recorded and available on the TV channels LSTV and RSTV. The video recordings of these parliamentary sessions is also available on the websites of the loksabha and rajyasabha. The websites of Loksabha and Rajyasabha also have PDFs of all the documents that you need to look up. The list of business, the questions, the bulletins, the debates and the speeches held on the floor of the house.

The objective of this blog post was not to bring out what happened in the parliament. Its to give the reader a general idea of what happens and that our parliament has enabled us as citizens to look for and find all the information about the happenings of the legislative arm of our democracy.

Since there is hardly a fortnight left in the current session of the parliament, Dr. Timepass will compile data of the business of the house in these 2 weeks and do some qualitative review. Come back again by the weekend to see what happened in the lower house of the Indian parliament this week and what we at Dr. Timepass make of it.

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Documents used for this Blog:
1. LS List of Businesses – 4th July
2. LS Bulletin Part 1 – 4th July
3. LS Questions – 4th July
4. Papers to be laid on the Table – 4th July

BMTC – Illusioned to Fail

BMTC – Bangalore Metropolitan Transport Corporation has always been one of my favorite things about Bangalore. In fact, the public transport of a city plays a major role in forming the culture of a city. Be it the trams and cabs of Kolkata or the locals and kali peelis of Mumbai or BMTC in Bangalore. This blog comes in the wake of the Chief Minister’s announcement to cut services in the city to reduce losses.

The CM of Karnakata, HD Kumaraswamy came out with an announcement that the only way to reduce the losses of BMTC is to reduce the lossy AC buses. These AC buses have a shortage in users and hence are not pulling their weight. The commuter community reacted with disappointment and said this was a stupid decision and the government was drawing short sighted conclusions.

BMTC before its separation and rebranding in 1997 was called BTS and affectionately called Bitre Tirga Sigalla by Bangaloreans. The BTS was known for its scanty service. BMTC was an attempt to breathe new life into the failing public transportation service. It started with acquiring fresh capital and equipment. The government of the day pumped money knowing well that it was a going down the drain.

The turnaround happened in the second half of the 2000s. By 2006-07 BMTC had emerged as a unicorn in India’s public transport services. The period between 2006 and 2010 can be termed as the period when BMTC reached its peaks in profits and popularity.

The measures taken were not simple. Money was added, people were hired and a lot of new services were added. New buses, improved bus conditions, Digital marquee displays, bus stop announcements, and the addition of all the different new kinds of service.

This was the time when BMTC went on an expansion spree, they launched the AC bus service, the airport bus service, the pass bus, women’s bus, the training bus, Janti vahini – double coach, hospital bus service, BIG 10 bus service, MBS – long route buses, and special high frequency bus services on specific route, patron engagement campaigns like Bus Day and the launch of the MyBMTC App. One can wonder what happened to all these plans. One by one, many of them gave way.

Recently it was announced that BMTC has reported a loss of 300 crores for the FY 2018-19. Why? How? How did the unicorn of public transport just 10 years ago start losing money? On closer observation, it becomes clear that the unicorn has been bleeding for quite some time.

While BMTC made success and reported profits in the first decade of the millennium, at the turn of 2010, the drive to innovate and upstart started drying and the objective was to capitalize on the investments made. The prices of bus service in Bangalore has always been higher in comparison to cities like Chennai or Hyderabad or Mumbai, the patrons were OK with paying the fare. It could be because of the lack of alternatives or the fact that historically the economic divide has been better off in Bangalore.

The arrival of Namma metro, Ola and Uber, rental bikes and cars may have played a small role, but looking at the growth rate of the city, all these are not enough to handle to 9 Million residents of Bangalore. In fact in any city in India we face this problem, the growth is faster than the availability of infrastructure – but that story is for another day, let’s stay focused on BMTC.

Traffic

So why now did BMTC start losing money? BMTC like everyone is Bangalore is a victim of the ever-growing menace of traffic. The city’s roads are filled with 45 Lakh 2 wheelers and 13 Lakh private cars, in comparison, the 6000 odd buses that ply though the city are doing a commendable job in ferrying public in the city of 9 Million people. The exponential growth in traffic means the turnaround time for buses goes up.  A 25 Km trip to Whitefield from Majestic – which is one of the kinder routes, takes nearly 2 hours. How many trips can a driver make in his designated 8-hour shift? Not more than 3.

Fuel

Public transport corporations are notorious when it comes to revising fares based on the fuel prices. BMTC is no different, it did this as it pleased, every change in fuel price was warmly welcomed with equivalent fare revisions. The revisions also affected bus passes, daily passes that costed  ₹ 20  when they first came out, now costs no less than 70. BMTC also periodically reduced the fares if there was a price drop in the fuel market. But as one can expect, they were far and few.

Fares

The idea of cutting loses by reducing the service routes is the general knee jerk reaction. MTC, the bus service in Chennai does this often – but it couldn’t be a good example to talk about as the MTC is not a profit-making body. In fact, there are very few public run bus services that can be compared to BMTC. How then can BMTC make a second turnaround? Definitely not by cutting services – maybe by redesigning the routes?

MTC Fairs – Bus service in Chennai

A 2017 blog post comparing the different RTC’s paints an informative picture about the state of Bus fares across the country. It is important to note, none of the RTC’s are making a profit.

ServiceRegularAC Service
BEST – Mumbai720
BMTC – Bangalore615
MTC – Chennai315
PMPML – Pune5
DTC – Delhi2.55

Since Namma Metro entered the scene of public transport in Bangalore, the BMTC has reduced its fares. This cut has been across the board, including long distance route on AC buses. If a passenger pays 80 rupees for a 25 Km distance that the bus takes 2 hours to complete, it’s hardly surprising that the bus is losing money. Today the average mileage of BMTC is 3 Km per liter and one liter of diesel costs around ₹ 65.  This comes up to ₹ 500-550 per trip, this should be easy to recover. Considering it is traveling on a long distance and hence the number of passengers using the bus should offset the sad mileage.

Politics

The CM of the state announced that BMTC would redistribute the costly AC buses to other RTC’s owned by the state in the north. While this is a move to ‘cut the losses’ Bangalore’s need says quite the opposite. The Bengaluru Bus Prayaanikara Vedike in its research says Bangalore needs at least 3000 more buses to cater the public transport needs.  One might say there is no place on the roads to add these buses, but as we’ve seen already, of the 65 lakh vehicles on the streets of Bangalore, there are only 6000 buses. Hence adding more buses could actually bring down the other vehicles.

So where does this leave us?

  1. Don’t cut bus services – they don’t affect traffic and they will help the public better
  2. Recalculate and reroute AC bus routes
  3. Don’t reduces bus fares for AC buses – metro is not a competition  
  4. Reduce bus fares for normal buses – they will help the public
  5. Real estate game – building TTMC’s was not a master stroke, may cut your losses here and stop the real-estate game
  6. Non Operational income – ad revenues needs a new strategy, renting of buses to private parties and renting of parking space can be made into a lucrative non operational income – this needs work

Most importantly, don’t just call BMTC to have failed before attempting to revive it.

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PS: Unfortunately I haven’t been able to cover the income generated via the non-operational activities like advertising, leasing and renting of buses, parking, and private party renting. Perhaps an addendum will come up shortly.

Also read: BMTC – Pocket full of Sunshine