SBI downgrade: Paying the price for the transition ?

Yesterday's downgrade of SBI's standalone rating ( signifying financial strength) , from C- to D+, by Moody's is , in my opinion, a culimination of the transition unleashed by Pratip Choudhury on taking over as Chairman. The erosion of almost 2% in its Tier-1 capital in Q4 FY 2011, due to higher provisioning was the starting point of the analysts questioining the asset quality of the Bank, and the end-result is yesterday's downgrade.

As the largest shareholder, the Government of India should ask the management to clarify the reasons for the sudden and significant increase in provisioning during Q4. Whether the asset book and  accounting norms really warrant this provisioning, which led to a 99% drop in its net profit for that quarter ? Ot was it motivated solely by the new Chairman's desire to show the inefficiencies of the previous regime, and the vigilence and pro-activeness of the incumbent one? Mainstream media has reported widely on this phenomenon, especially in PSU banks, where each top management transition is followed by a significant fall in performance, ostensibly to lower the bases with which the incumbent management would be compared going forward.

The loser in this game are the shareholders, with Governemt of India (and hence the citizens of India) being the largest block. The management continues make statements such as " the downgrade is not a downgrade per se" ( http://www.moneycontrol.com/news/business/moody39s-downgrade-notdowngrade-per-se-sbi-chairman-_593931.html).

The LCC farce in India

How to start a low cost airline in India?

Take a full service airline, change the name, do away with free food and other freebies, possibly tweak the plane configuration to all-economy – and voila – we are ready!

World over, the Low Cost Carriers ( LCCs) operate on a business model which is different from what a traditional, full-service carrier would have. They operate from secondary airports ( often distant from cities) which have lower costs such as parking charges etc., often fly different routes, and offer bare-basic services to their customers. The aircrafts purchased are often of different configurations, enabling cost savings on procurement as well as maintenance.

In India, most of the airline owners thought that just by doing away passenger amenities, their airlines would become low cost. For e.g, the so called Jet –Konnect uses the same airports, same planes and the same routes as Jet – and becomes a LCC just by a change in name and cutting out passenger facilities. I think very few airlines have realized that they have to operate in a very different manner to realize the low costs. Parameters such as aircraft turn-around and employees to aircraft ratio need to be monitored closely and punctuality helps. ( In my view, Indigo has done a good job on these).

The problems the LCC sector faces are arising out both of the aviation infrastructure, as well as their business model. While airports and ground handling remains in-efficient, the way these airlines are run contribute majorly to their poor operating performance. While MIAL (which manages the Mumbai airport) might have done a good job of changing the tiling and exterirors of the airport and selling retail space, it has not done anything to improve the actual aviation infrastructure , which is what any flyer would / should be most bothered about ( because that determines your actual flying experience – I am at the airport to fly to / from somewhere, not to shop / eat !).

The LCC airlines in India developed without a proper eco-system / infrastructure to sustain them at the low-fare, low cost value proposition. With rising costs, low fares were not possible, thus impacting demand.  It seems that a shake-up / consolidation is the only way this industry would find its right bearings.

My thesis is validated by the statement Kingfisher Airline's CEO made, stating that the operating costs involved were the same as in a full-service carrier and the revenues lesser  - http://www.moneycontrol.com/news/business/operating-costlow-cost-carrier-competitive-kingfisher_594359.html

How to irritate your co-passengers in Mumbai local trains

While these suggestions are primarily meant for 1^st class passengers, I think they can be applied (though with a varying degree of success) in the 2^nd class compartment. I am unfortunate not to have any experience of the Ladies compartments (not that I would mind, but it’s a punishable offence) and hence can’t offer any suggestions there.

Legs in V – formation with arms stretched

No – this is not a yoga posture. If you get a seat, keep your legs in V-formation, with knees opening outward, and arms stretched out of the line of your body. This position helps you maximize the space you occupy, and as everyone knows, space in Mumbai  is at a premium. Such a seating posture helps you invade the  personal space of the passenger(s) seated besides you, and is especially effective if you are seated in the middle. This is also a key body language signal, which says aloud that you, alpha male that you are, care only and only for your personal comfort and no further.

Stand with backpacks on your back / front

In a crowded train, the backpack is your only protective shield. Wear it on you back if you are standing, and the guy behind you will curse the day he was born – and ditto for the guy in front of you, if you choose to wear it on your front. A backpack slung on your frame also helps consume the standing space meant for at least one more person, with the net result of making the compartment feel more crowded for others.

Sound of Music

While listening to your favourite music on the mobile phone, be generous and share it with the world – keep the phone on loudspeaker. This would generate immense goodwill for you, as people are befitted by free music (of course, of your choice!) in the stressful environment of a local train compartment. While its another matter that the sound emanating from your phone might be a shrill cacophony, its clearly the faulty eardrums of your co-passengers (who also seem to have defective eyes, the way they are staring at you).  

Let the whole world know!

Talk on your phone loudly, as if you are relying on your own lung power rather than the air-waves to carry your voice. Let the whole world know that you are not afraid of them knowing about your business or personal matters, thereby setting high standards of transparency (Isn’t that whats Anna Hazare wants?). It doesn’t matter that people are reading, talking, or sleeping – my voice loudest.

Regulate

Stand at the footboard – right from VT, even if you have to get down at Virar / Karjat / Panvel – and don’t let people use that part of the entrance. Insist that they use the other half of the entrance only for boarding and lighting. After all, it’s a matter of property rights, and having paid the (subsidised) fare, you have as much claim as anyone else on railway property, inconvenience or safety be damned. This way you are regulating the flow of people in or out of the compartment, ensuring that maximum no. of people of discouraged from using the trains, thus reducing the load and the subsidy burden on railways.

 P.S : These are some common irritants I have faced during last 5 years of my commute on Harbour Line, and I can safely assume that these are common issues faced everyday – small irritants showing the utter lack of civic sense that  relatively well-to-do ( 1^st class passengers) , middle class citizens have .