Tuesday, July 31, 2012

Root cause of power failure in India

World Crisis: One of the biggest blackout hitting 600 million people in northern and eastern states including the capital Delhi. Here is what is happening with respect to this crisis:


What is an electrical grid?

A power grid is an interconnected network of transmission lines for supplying electricity from power suppliers to consumers. Any disruptions in the network causes power outages. India has five regional grids that carry electricity from power plants to respective states in the country.

What leads to a grid failure?

The power grid collapsed because some states apparently drew more power than they were authorised to do to meet the rising demand during the summer, said chairman of the state-run Uttar Pradesh state Power Corporation Avinash Awasthi. The power deficit was worsened by a weak monsoon that lowered hydroelectric generation and kept temperatures high, feeding the appetite for electricity.

Why states have power issues?

Weak Monsoon: Farmers have now started using energy-intensive water pumps for irrigation to save their recently sown crops which pushed up demand. Also, hydro-power accounts for about 20 per cent of installed power capacity but reservoirs have only 24 per cent of the water they can hold -- just about half of what they carried at this time last year.

Politics: Many state governments give farmers free or near-free electricity, triggering a vicious cycle. The policy of selling electricity to consumers at politically correct prices is making the things worse.

Coal Supply: Coal shortage also chose the right time to trigger the crisis. The industry has advocated abolishing a 1973 Act that nationalised coal mining. Changes to the law are expected to allow professional miners to scout for and mine coal.

Distribution: The government-owned distribution monopolies in the states have all but lost their ability to buy power because their political bosses force them to sell it cheap, sometimes free, to voters. This opportunism is hurting the economy: the government estimates unaccounted for sale of power in India, at a third of the total, costs the country 1% of its gross domestic product.

The road ahead

Introduce competition in all three areas of the business - generation, transmission and distribution - to enhance productivity and contain leakages. Create an independent watchdog that can withstand the political pressures playing on different links of the nation's power supply chain.

Finally, free up pricing to make consumers more responsible for the electricity they use. This has been the broad course of electricity reforms the world over.

Tuesday, July 31, 2012 by Saumya Aggarwal · 1

Monday, July 23, 2012

What's missing at Maruti Suzuki?

As seen in old Hindi movies, trade unions, on back on militants, are creating problems for businesses to grow. This has been phenomenon in Gurgaon for quite sometime. The violence at Maruti Suzuki's Manesar factory, which killed one senior employee and injured close to 100 others, bodes ill for the future of not just Maruti but also the industrial hub of NCR.



Last year it meant a loss of over half a billion dollars and this time even more as a life of employee has been taken which cant be counted in monetary terms. Delhi is great city (by far the best in India) and sadly surrounded by Noida and Gurgaon which have not been able to take success humbly. This prompted me to seek reasons of what is missing in Maruti Suzuki.

The Japanese way
Maruti made key changes in senior management to include a Japanese, Shinzo Nakanishi, the current MD of Maruti Suzuki though RC Bhargava, who was a director, was made chairman. 
Maruti is major contributor to Suzuki global profits and hence it wants to seek complete control of it using age old Japanese way without understanding ground Indian scenario. Culturally, Indians and Japanese are far apart.
Running mechanism has changed in Maruti. It has been under lot of competition with companies like GM, Volkwagon, Tata, Hyundai changing Indian landscape and on other hand costs, wages have soared. Here comes the Japanese solution of keeping 40% workers on contract and paying half of regular workers.

Gurgaon region
There has been complete change in lifestyle of Gurgaon. Land prices have risen multi folds overnight and people have become super rich. I know a person through a friend who owns Rs. 1100 crores which he made by selling his land to developers and as per Haryana government policy, land acquisition does not attract tax. With these changes around, expectations have also increased exponentially. Young workforce wants to be at par with peers. Poor wage hikes, inflation, Congress government, competition are few factors resulting into aggressive workforce.
This region is also known for "Jatts-Gujjars" and rapes. People have made killer money but have not received education at that pace, resulting in gaps. Few "Jatts" on back of money power break the laws and have proved to be mess to healthy society. Sonu Gujjar, the leader of the labour unrest at Maruti plant last year, represents that generation.


Burning colleague is a brutal act and can not be justified under any circumstances. I feel the community is still premature to digest Gurgaon success (only because it is adjacent to lively Delhi). If "Jatts-Gujjars" society, government continue to do nothing about these situations, there are little chances of making corporates stick to this part of the world.

Monday, July 23, 2012 by Saumya Aggarwal · 0

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