Monday, March 24, 2008

Rajiv Gandhi International Airport, Shamshabad

Awesome @ first thought, but man would it be costly. (Cant we think of better names ?)

I was extremely apprehensive about reaching the airport on time but the promised half an hour shuttle service was there on time all right ( I waited to 2 buses to pass by), the call center knew exactly the kind of questions that people would ask and responded accordingly.

The logistics: Distance to any part of the city is 20 KM + and would easily take about 1 – 1.5 hours. Bad beginning I would say, for all the planning no one would have imagined that Hyderabad would get rainfall in March. Most people would want to avoid any sort of delay and hence the travel time could range any time from 2.5-3 hrs.

( My mom packed me out about 3.5 hrs before the journey – low cost aircraft airlines dump passengers right? , that gave me ample time to explore the airport. I began writing this at 9:15 PM (my flight was at 9:40), since the flight took off at 12:15 (yeah Deccan), I had more than ample time. Anyway, lets leave my travails apart. )

The architecture: It is beautiful to say the least. Very easily accessible, there was reasonable traffic today (being the end of vacation period) and despite being the first day the staff were able to manage quite well. Need to look up the architect, but the feeling of grandeur and space are clearly there. The demarcation between domestic & international is not quite clear & the information desk is one level lower than where most people would descend. The car park is huge (I did not check the parking charges, but going by rest of the costs it would be pretty steep too). The air-conditioning was excellent and the place was broadly clean (yes, first day impression).

That’s for the good part, now the ugly bit.

1) At a prepaid taxi fare of 600-800 bucks
2) Total commute in absence of proper roads (the Secunderabad-Habsiguda-Uppal X Road – Nagole – Chandrayangutta – Airport) falls apart after Chandrayangutta even on a Sunday. I shudder how much time this route would consume on a working day. Anyway assuming a total commute time of 5 hrs from anywhere worthwhile, the new airport would ensure flying-in and flying-out from the city the same day would rarely make sense anymore. (The reason for all the property coming up around the airport). The roads will get built, should we have waited? I guess not, its impossible to drive change if its not sudden.
3) The services at the airport: No ‘free’ water that I could find. This is what is humongous, the cheapest meal that you can have is for Rs 200 (cup of rice/1 roti +dal ). Coffee inside is 100 bucks + , most of the junta were busy gorging on ice creams because that was the cheapest thing available (yes Gelato @ 50 bucks was the cheapest thing in sight). Cookies at 100 bucks each, onion rings at 120 bucks, almost as if the developers feel that along with international quality we need international prices too!!!
4) With the time/transportation cost et all the other angle to this is the user development fees that is supposed to be charged to the consumer. The idea being that since the consumer is benefiting he must pay for it. As usual, take the last penny from the people who are willing to pay syndrome. In the short run, theoretically the costs should put of some LCC passengers, but that pie is pretty large so there should not be a significant impact
5) What is more important to see is the issue of the ground handling being done (or contracted out) by the developer. Lot of thought goes into the bidding process and each revenue stream would be a reason (and possibly up-front payments from contractors could be one of them) for the IRR’s to accrue to the developers. A lot of players would be watching this with interest, the govt. possibly needs to build in some flexibility in its contracts.

Overall, a step forward. But unless the surrounding issues are quickly solved, we could once again have a case of “well begun is half done”. One thing going for this project is that its extremely difficult to migrate back to the old airport and hence the stakeholders have to hammer out each of the issues. There are no short cuts.

PS: Finally, Whats going to happen to the prime Begumpet Airport Land? And please pardon me for the poor quality of images :)

Sunday, March 23, 2008

There will be blood - Movie Review

Cast: Daniel Day Lewis (Daniel Plainview), Paul Dano (Paul/Eli Sunday), Dillion Freasier (HW Plainview)
Direction: Paul Anderson
Music: Jonny Greenwood

I am writing a review after a long time, but it is for one of the most powerful films of recent times. The story line is pretty simple, Daniel Plainview is a oil prospector, one that has no scruples and will do anything to get his way and to make money. During his time to Boston, he crosses paths with Eli Sunday a young priest. The conflict between oil & the church in early America. Thats the plot, the simplicity (or monstrosity) of the characters is what holds the audience.

A silver miner falls in his mine and breaks his leg and goes on to discover oil. The mind of the man who is after something valuable is almost dead to all emotions, the dry surroundings accentuate this feeling of anguish. Daniel Plainview takes up an orphan H.W and inspite of his unique way of handling the kid, H.W is Daniel's last connection to humanity. (When the son finally leaves him, Daniel breaks down totally, and after his final showdown with Eli, says "i am finished") . Eli is the opposite, he knows the lands resources and his harvest, his pursuit is faith. His method of control of the minds is more potent than that of Daniel, the grip of faith over logic. Over the period of movie, he proves that he is after the same wealth that Daniel is after and equally corrupt.

The movie is in a way built around Greenwoods' music. Its almost as if the director has shot many of the scenes to match the songs. The music is dark, edgy and takes you to the barren lands of the black gold, where men built destinies at the cost of themselves. The movie is quite detailed, but the edginess of the visuals, the stunning usage of the camera work and the right usage of dialogue make you drown yourself in the imagery.

Danial Day Lewis plays the man after his own soul to the perfect T. From his days of mining, to his shock/disbelief/pain when H.W goes deaf, and his weakness/realization/anger when he finds out about his 'imposter' brother are a masterclass in acting. His fury at Eli (over paul, did paul exist is something which I did not get) at the well and during the final act is absolute genius.

One of the best of all time. 4.5/5

Excel keyboard shortcuts

Finally, completing the stuff i read on chandoo's favorite shortcuts, I use a whole lot of them

1) Ctrl + 1 : format
2) Ctrl + shift + 1: Number with 2 decimals
3) Ctrl+shift+5: convert to %
4) Alt + o, followed by c,w (or alt+o, followed by r,h), column width (row height)
5) Ctrl + spacebar (shift + spacebar) select column (row)
6) Once selected, ctrl+shift+ "plus" (ctrl+ "minus") add (delete) row
7) Alt+e+a+a clear all
8) Ctrl+r, copy right, ctrl+d, copy down
9) Ctrl+down arrow (right arrow), end of series (row).
10) Ctrl+ [ - this is awesome takes you to cells on which your reference cell is dependent. use ctrl+5 to get back.

Xl for dummies - II, Xl Modeling Rules

Now that you are ready, simple modeling rules:

  • All assumptions go to a single sheet, to change this is a cardinal sin. There should be no hanging numbers (yes not even tax rates or some other arbitrary number) in any sheet. If I gave the assumption sheet to a someone who knows what he is doing, he will be able to recreate the entire model from the assumption sheet.
  • All inputs (hard coded numbers) are colored blue (typical conventions) and only those generally need to be changed. To avoid complexity you can just use one color code, but lot of modeling people i know use a master sheet in which they define what each color coding (assigning a color to a particular text or no).
  • The units of each input need to be clearly defined and so should the dates.
  • Use links and formulas, there should be no repetition of the assumption numbers anywhere (this is damn irritating, you are trying to see the change in the model based on one assumption and you find that you have to change the inputs at a zillion places)
  • Coloring cells: This is a bit of an open area, I personally dislike a lot of colors in my model, but lot of modeling gurus prefer using them (as i said, I am a dummy)
  • Do not hide rows, columns (or sheets for that matter). If you don't want the focus there, just group the rows/columns. The viewer will decide whether he wants to see them or not.

Please save continuously, Jesus saves.

Xl for dummies - I

Let's for a second assume that you also have the misfortune of running into (yes weird usage of the term) which involves a lot of xl files and you for lots of reasons did not listen to that class in college.

To begin with, xl is not that truant woman who does not respond your overtures, quite the contrary its one msoft product that you can score if you ask the right queries ( nope i am not a nerd).

Most people use a multi tab format or a single tab format (data in different sheets or data in single sheet) . I suggest you use a multi tab and the cut and paste the data into the same tab to make it easier to model.

Getting started (I am assuming you know a little bit of how xl looks like):

  1. Right click on the empty space and choose both standard & formatting options for your menu.
  2. Go to tools options, calculations choose iterations with 100 as minimum and maximum change as 0.001 (most models are built in a circular mode, the model will break if you dont have this enabled)
  3. Go to tools, add-ins and enable the solver add-in and the data analysis

The basics:

  1. Begin with a basis of 5 sheets (each tab being a sheet and the file being called a workbook), right click on the sheet and you will get the option of insert sheets.
  2. Right click on one of sheets (say sheet 1) and choose select all sheets (what you are doing is grouping sheets, you will see in the window itself a could suffix). Now you are ready to create a basic good looking workbook. (please note that changes in any one sheet will be reflected in all the sheets)
    • In any sheet place the cursor on cell a1 and hit (ctrl+space), the column A is selected. Now hit Alt+o followed by c and then w, you get to column width, set it at 2 or 2.5
    • Next, select column b (move cursor to column b, do ctrl+space) and set it to sum huge number say 16 (alt + o, c, w then 16). More often then not the second column is where your primary data should go in a model (if its financial of course)
    • Set column c at 0.5
    • In the sheet that you are working use Ctrl+A (select all), then choose your favorite font from the menu options. I use trebuchet MS or Book Antiqua
    • In cell B2, write down your project name (Say Project Madrid)
  3. Bang you are ready to roll, all the sheets look the same. You could also insert another sheet as a rough, which would be deleted at end of model. Now again click on sheet 1 and select ungroup (the group suffix on the window must be gone).

Warning: Save the sheet first, Jesus always wins over Satan because Jesus Saves.

Saturday, March 22, 2008

Public Private Partnerships

Developing countries ( and democracies at that), need private sector investments. At least in India the private sector is no substitute for the govt and hence investments are routed through the public private partnerships (route). It is win-win for both the parties: The govt gets kudos for getting the infrastructure asset up (theoretically the govt does nothing in the partnership except for facilitating the ease of construction, i.e. ensure that this project is safe from other other arms of the govt.) and the developer gets the benefit of an asset class that would provide steady cash flows to him.

Is it profitable?

Sure is, the most important thing in India is to get the asset up, which can be way beyond the project schedule.
The demand has always been there, more latent than pronounced in some cases (think power the peak deficit is only 10,000 MW but most of the country is in darkness)
Since the licenses are for periods of 25-30 yrs, the asset and surrounding areas bring in monopoly rents

What are the dynamics:
Revenue share: The do all end all, the govt would set up a base price, the bidder would bid at a particular amount of the base price + a revenue share. Revenue share is nothing but the money you are paying to the govt. for letting you put up the asset at the expense of state resources. Thsi determines who wins the bid at the end of the day.

Traffic: Irrespective of whether the asset is a port, road or an airport the most important thing is to guess (yes guess is the operating word, no one really knows what the potential of anything in India is, its a way too complex combination of cost benefits, so they surmise - but there are enough tools to guess right more often than not) the traffic that the asset will support. The difference is revenue share bid out by different companies relies primarily on this difference in estimation of traffic. You believe that the traffic will be so high that with the costs (most costs are pretty much fixed whether for x traffic or 3x traffic), giving the developer huge cash flows.

What can go wrong?

As I wrote before, a lot can go wrong, but primarily greed and the government's need for control: More often than not, the developer will bid an obscene revenue share and then realize that his cost structure does not support the bid that he has put in. Hence creative ways to fleece the end consumer. Typically the corruption benefit of an asset approved under one govt. will accrue to the next govt (construction time of 3-5 yrs), so the govt. have really no incentive to keep a tight leash on the bidding process (thing navasheva sewri link). If everything goes right, then both sides want to make money as soon as possible and end up pushing the project out too fast (the international airport in hyd seems like that case), leading to operational chaos.

Still, given all these kudos to the promoters who have the balls to try and put out these assets tying up crucial cash for years together in the hope of some mirage. Only the unique animal called the Indian Promoter can attempt it.

PS: I have created a file with basic numbers for understanding the concept.


Friday, March 21, 2008

GMR - Hyderabad International Airport

I am going to travel in Air Deccan on the first day of operations of the airport. I am damn apprehensive about the working of the airport.

Along with the practical aspects of reaching the airport and the flight taking off, the generic questions dogging all PPP ventures are broadly the same:

1) Who determines the revenue share? Once the bids have been submitted, should there be regulation of sane/insane bids?
2) Revenue scheme: Should this be clearly mentioned upfront or can the developer keep innovating on schemes of revenue?
3) User development fee: This is the holy grail, its almost circular, the consumer of the service is being provided better quality, so he ought to pay for it right? How much should he pay?

Shall handle each of these queries in a separate post, as for now, to get to mumbai is the key.

Who will you pick?

GroupingAscending Span Mat Runs HS Bat Av 100 Wkts BBI Bowl Av 5 Ct St
Test matches 2005-2006 6 16 10 8 0 16 5/46 37.06 1 2 0
One-Day Internationals 2001-2008 59 41 12 4.55 0 82 5/39 28.46 2 9 0
Twenty20 Internationals 2005-2007 3 2 2 2 0 4 2/14 16.75 0 1 0

GroupingAscending Span Mat Runs HS Bat Av 100 Wkts BBI Bowl Av 5 Ct St
Test matches 2001-2008 34 330 34 10.31 0 119 6/32 31.22 3 16 0
One-Day Internationals 2001-2008 75 104 30* 13 0 106 5/45 26.95 1 21 0
Twenty20 Internationals 2005-2007 2 0 0* - 0 2 2/19 21 0 1