Saturday, April 24, 2010

Tata Swach - the nano waterpurifier : Review

Clean drinking water is distant dream for most of Indian households unless you are ready to spend huge sums on buying out water ( in cans ) in purified form or getting a purifier installed. The situation worsens when you are not sure of the quality of cans which we buy.We used to buy 20 lt cans some ISI company costing Rs 50 rupees .When you spend so much for water , last thing you will expect it to see a mosquito larva swimming vigorously as if practicing for next olympics. When i found myself in that situation , we instantly abandoned the idea of using water cans and started using boiled water.Also we started looking for water purifier to circumvent the long process of boiling the water ,cooling it and then using it. On examining large stores such as Croma ,the least expensive one was around Rs7000 , which also need to be fixed permanently ( which is difficult you in case you live in a rented premises). I remember seeing a press release from Tata Chemicals few months earlier about a low cost purifier named Swach which promises of good quality drinking water at affordable price. When i checked then with their retail outlet Croma, i was informed that it hasn't been released for consumers yet. So the process of boiling water using it continued for sometime .

Recently when i found Tata swach at display shop we bought it immediately . Retail price was mentioned as Rs 999 but we paid Rs 950 after slight negotiation.

It has two containers interconnected by a modular tube which does the entire process of purification. It promises to purify around 3000 liters of water and then the purifying module should replaced at a cost of Rs 365 . It seems this amount of water can get reduced based on the quality of water used. So it takes a one time investment of Rs 634 and a running cost Rs 365 per 2000 Liters ( a conservative estimate) ie 18 paise per liter. Consider this with a water can which cost me 250 paise per liter earlier.The one time cost of 634 can be recouped after using for 275 liters .In time axis it takes around 2 months to recoup onetime expense ( considering 5 liters usage per day).
Not a bad investment right ?

Lets dwell more into design of this product.

Quality of purification:
I am not sure if the quality of purification is good as i am unaware of any scientific studies to validate their claim. No other choice but to bank on the promises of Tata Group which more ethical. There is a feature of Autolock due to which the purifying module stops water flowing water to lower modules when its effectiveness is done.

Material Used
This product is designed as a visually elegant model where entire product is made of see-through plastic ( might be to give the users that the quality of water is good). But it looks more fragile. I havn't done drop checks to verify it though :).Since this is targeted at the middle class and lower class families, care should have been taken to make it more rigid. Though replacing the plastic with stainless steel would have increased the cost of the product , they should have released one version in stainless steel albeit at a higher cost.Let the consumers choose what they want. Atleast the grade of plastic should be increased for sure ,else it will nightmare for frequent users (say house wives with naughty kids :) ) to handle it with care.


Shape of this product though stylish is little bit intriguing . Considering the Nano tag attached with this product , obviously the aim of the design team should have to give best productivity at least cost. Except the purifying module ,it has only 2 container each of which can holds 9 liters water. So design objective should have been to produce these containers as huge as possible at least possible price point ( with least plastic usage) .Since the shape is a hollow with a lid at top and bottom , design objective can be converted mathematically to design a 3D shape with maximum volume at a given outer surface area.This can more refined to find a 2D shape which has maximum area for a given perimeter ( as one axis , the height is mostly constant here).The cross section of this purifier is triangle. Is this a optimal shape ?
Lets take triangle and circle , of constant perimeter and find the area of each of them.

Perimeter = P , Area = ?

For Equilateral triangle ,
P = 3*s => s = P/3
Area(triangle) = (s*s*1.732)/4 = P*P*1.732/36 = P*P*0.048

For Circle ,
P = 2 pi * r => r = P /(2*pi) ,
Area(circle) = pi * r * r = pi * P * P / (4 * pi * pi) = P*P/(4*pi) = P*P*0.080

Area(circle) / Area(triangle) = 1.66

Circular cross section would have been more appropriate , as it can hold 66% more water ie ) circular design would have hold 30 liters of water than the 18 liters which can held now with triangular cross section , with the same amount of raw material usage.

[ Save a interview question : why does a balloon blows up in a spherical shape ]

I can think of few reasons for them to choose the triangular design
  • Packing and transportation is more easily than the cylindrical model
  • To innovate a shape & to question the traditional cylindrical one.
  • More importance was given to elegant look rather than usability.
But none of them give enough advantage to disqualify the cylindrical design .Companies of this stature should have done a lot of brainstorming before finalizing the design. Is this a flaw in design or am i missing something else there ?

Friday, April 16, 2010

GOLDen Investment

Do you like Gold ?
No doubts , answer would be a unanimous "yes".

But Do you invest in gold ?
Answers varies from person to person.Although traditionally gold has been high on investor's shopping list nowadays its getting replaced by more glittering investments such stocks,mutual funds,real estate,flats etc at-least by our generation. Even seasoned investment advisers advice to allot 5% at max of your total investments for Gold.

Until the recent sub prime mortgage crisis, i have never considered Gold as a viable investment option comparable to stocks & Mutual funds. [Psychological reasons for this fallacy is arrived at at later point.] In this article lets discuss the viability of gold a as effective investment.

How do we define a Investment ?
In Laymen terms , Investment is process of saving our wealth and multiplying it at a future date. Technically its little more than that . Money/Wealth should be measured in terms of its "purchasing power" ie) what it can get for us. So by Investing we are not saving the actual money , but saving its purchasing power for future. Purchasing power is inversely proportional to the inflation. Say the price of a product X is Rs 100 and you have Rs100 at your disposal .With this you can buy 1 unit now.If inflation for a year is 10% .After one year price of the product is RS110 . Now with the same 100Rs , you can buy only 91% of the product X or put in other words purchasing power of the money you had one year back has reduced by 9% .

Theoretically, any Investment Plan which you device to save your income should consider the following
  • Strictly Protecting the Purchasing Power till a later date [ Mandatory ]
  • Possibly increasing the Purchasing Power [ Good to have ]
The widely tracked indexes for Inflation in India are CPI & WPI. So practically a good investment can be characterized as one which will give you consistent returns higher than CPI /WPI over a longer period. As we cant foresee the future , we can only rely on history to predict the future trends .

Gold as Investment

Lets take Gold as investment option and consider its movement along with inflation indexes. In the first chart Indian Gold prices , CPI and WPI annual variations are considered for the period from 1970 - 2009 given by RBI[1][2][3].Note that stocks market index is NOT considered for this comparative study since its a new concept to India and data is available from RBI only from 1980s and it has been active only in the last two decades.

Next chart gives how the Rs100 invested in 1970 in various options such Gold , or in a imaginary product worth RS100 growing at the rate CPI / WPI and in bank deposit @ 10% rate grows over this 40 year period.

Above chart shows that a basket of goods worth Rs100 in 1970 would have cost Rs 1800 in 2009 , but Rs 100 invested in Gold 1970 would have grown to Rs 6800.This states that we would have not only safeguarded the purchasing power by investing in gold , but have also increased the purchasing power by 377% over this period.

Historically gold imports and exports were heavily controlled by Indian Govt until as recent as last decade. So a logical question arises - if govt controlled historic prices of gold in India can be considered for future projections for our current investments. So same exercise was repeated with historical prices of gold in London , which is (was ??) a financial epicenter and followed free market practices for long. But interestingly London prices gave far more superior returns .

Lets dig out the reason as to why gold was not glittering in India during the decade from 1990-2000.As mentioned earlier movement of gold was highly restricted by government since our independence till 1990s. Indian woman's ever growing love for gold on one hand and govt's restriction on the other hand kept Indian gold prices always at premium to international prices. This resulted to flourishing black market for illegally smuggled gold. Remember Daewood and chota shakeel ? During the early years of the decade 1990-2010 ,India faced its worst balance of Payment crisis and we almost went bankrupt .We were forced to pledge 65 tons of gold as collateral for foreign exchange and it was moved from RBI reserves to London. True to the Indian spirit of performing to excellence only when pushed to corner [another classical case is the Green Revolution of the 70s] , our Govt started reforming in most areas. One of these areas was the restrictions on import export of gold. This free movement of gold caused Indian prices to gradually loose its premium and started coupling with international one. This is the reason for gold prices not giving superior returns in 1990s.Following shows the premium of indian prices over london prices for the period from 1970 - 2009.

My Fallacy
This was an important period for me too , when i grew from 8-18 years. This is the most critical time frame in anyone's life during which he/she learns most about his surrounding .The perceptions formed are hard to change in future.I have grown up seeing gold prices lying lackluster. Also inline to most Indian households substantial portion of wealth in my family ( although its low in absolute terms) too was in the form of jewels and I grew up riddled by the questions as to why we do we throw up this much wealth into jewels which dont provide any value add and also a non appreciating asset. A broad picture now solves all the mystery.

So Gold as a viable investment option has proved itself by its own history.Few more attributes of gold which provides it a edge over other traditional investments are as follows
  1. Large sum of money is not required ( unlike real estate etc ) which makes it ideal for every spectrum of investor.
  2. High liquidity ( unlike realestate)
  3. Possibility of systemic investment ( unlike realestate)
  4. Recent options to invest through demat ( Gold Exchange traded funds ) , which reduces the risk of carrying physical gold.
  5. Low variation in prices ( low beta) compared to Stocks.
  6. Aesthetic value. Have you seen a girl who hate gold :)
  7. More than all cushion for the bad times.Important lesson which the recent US dept crisis has taught us is that during crisis( be it a financial , famine , war or anything ) , most investments including stocks,real estate tanks barring gold , which raises at even faster rate
All the data used is taken from RBI publications [1][2][3] .Comparison and graph plotting were done using excel .The datasheet created during this exercise is also attached for reference[4]

[4] DataSheet

PS: The author is not responsible if your wife shows this article as reason for buying one more necklace :-)

Saturday, April 10, 2010

My New Camera ...

Its already 4 years since i have bought my first camera (Canon PowerShot D400 ). Although its still working fine , it has been technically out smarted by its recent cousins, considering the fact that it takes 3 secs to take one snap compared to 3 snaps per second by recent ones. So i decided to upgrade my camera. Obvious options were to go for a feature rich point & shoot (of range Rs10-15K ) or to get a starting range DSLR.I decided to go with the second option and was collecting information on them for sometime. Recently i decide to execute this plan.I zeroed on the following models based on price and performance.

Nikon D3000 kit with AF-S DX 18-55mm VR f/3.5-5.6G lens

Canon EOS 1000D kit with EFS 18-55 mm f/3.5-5.6G lens

Some of the pros and cons when compared ( solely by reading through net and with a little chat with friends) are as follows

Nikon D3000
  • + Kit comes with a Vibration Reduction(VR) lens , a quality which will intelligently find out shakes when taking photos and negate their effects
  • + 3 inch screen
  • - Very few customer care centers (only 4-5 available)
  • - Lack of Live View ( ability to see image in the viewfinder and take photos as we do in point and shoot)
  • - No video capture mode
  • * Nikon Price 25,295

Canon EOS 1000D
  • + High network of customer care
  • + Availability of live view for novice users
  • + Video capture available.
  • - Default kit lens doesnt have image stabilization IS ( similar to VR feature in Nikon)
  • - Bit old model released in 2008
  • - 2.4 inch screen
  • * Canon Price 30,950
There are tens of gargons in DSLR terminology which are more important for a DSLR's performance and ease of use. But since its values were same for the two cameras ,i cared little about them.

Reading through the net , i could see that performance wise there is no clear cut leader among this 2 models. Another point to be noted here is that SLR lens being very costlier , people tend to buy models which are already owned by their friends so as to pool in high end lens at a latter stage.One of my friend Prasanna A, who is passionate photographer, already owns a Nikon.
So i decided to stick to Nikon and started venturing into the next step of finding out where to buy .

Checked with price list on few leading stores and its as follows
Tata Croma
  • Nikon 3000D Kit Rs 29,995
  • Canon D1000 Kit Rs 24,995
Camera Citi
  • Nikon 3000D Kit Rs 28,000 (famous retailer in Dadar,Mumbai.He also takes e-orders)
  • Nikon 3000D Kit Rs27,500
Amazon USA
  • Nikon 3000D Kit 452 US$ (or) Rs22000

Buying in USA seems to be the best option , atleast in theory.But we also have to consider possible customs tax liability ( 1/2K ) & deficiency of warranty in India.It seems the kit comes with local warranty in the country of purchase and lens comes with International warranty. So decided to buy out in Camera citi and after slight negotiation they offered it at 27.5K INR in return for full cash payment.Not sure if more negotiation should have been done.

Now its time to check how its working .Today went to Lalbagh to check out how the camera actually behaves, after waking up GaneshPrasadh in wee hours of a Sunday. This necessitated certain level of torture though:) .One of the photo taken there is given below.

More photos can be found in my Picasa Album

It seems custom duty is 35% of the value of product ( not as 10% consider above ) and 25K worth of import is exempted from custom duty.Thanks for GaneshPrasadh & Arun for correcting.

Sunday, April 4, 2010

Food Price Inflation - Boon or Bane?

For long , we have been considering control over inflation as a indicator of government's performance .Lower the inflation better the government's performance.This article tries to question this basic theory , concentrating on agriculture industry and impact of food price inflation on it.

History of Agriculture

Lets try dig some history to find historical importance of agriculture as income generator.During independence agriculture as a industry accounted for 40-45% of India's GDP.Later due to industrialization of the 1970-1980s and uprising of the service industry in the 1990-2000s , share of agriculture has drastically reduced to 17% of the country's GDP. These are depicted in the following data from world bank.

Thanks to service industry revolution , per capital income more than doubled between 2000($450) to 2008($1070), an increase of 137% in 8 years , a factor any country will be jealous with. This is mainly due to explosion of service industry and to be more particular IT and ITES sector.

So far so great .. Indian Economy has diversified itself to a range of sectors and made it more resilient one.The above statistics might project as if overall living condition in India has seen a substantial change in the last decade.People employed by agriculture would also drastically reduce over these years and now more labors would work in the industry and service sector than agriculture. But that turns out to be a myth.

Basically people depending on agriculture for their living as a percent of total population (22-25%) has remained almost constant over past 50 years[1 page 21]. Considering the ratio of agricultural labors to total working population has shown very low decline from 60% of 1950s to 52% currently[2]. So this huge chunk of population gets very small share of Indian development. Sometime statistics hides more truth than reveals.Average Income is perfect example of this. Its as if concluding as if both person in the following picture on average have sufficient food and good health.

We are not looking into the standard deviation for the average income [ i couldn't find out the a study (from a reliable source) which projects the deviation in a meaningful way].These facts leads us to conclude that income of farmers has barely increased and so should be their living conditions.Deviation between the Haves and Have-nots is increasing alarmingly.This is also attributed to recent surge in Maoist activities.

Impact of govt policies on Agricuture Industry
Viability of any business is dependent on the ability to sell what it produces. This sector has been on the receiving end of govt short sighted policies .Govt takes all efforts in its disposals to keep price hike in farm output.Some of the measures taken to keep the food prices under control are
  • Blanket export when ever a food commodity is getting costlier (sugar,milk products ,rice and what not)
  • Subsidized imports to take care of local demand raise.
We have even created a impression that hike is food prices is detrimental to the country as a whole, which is not true atleast to the industry which produces it. Even though farmers form huge chunk of population and effectively have larger rights in the democracy,their demands never reach up the center.This can attributed to lack of education and hence the reduced power to lobby.Governments to pacify these section normally throw out few bread crumps occasionally ( normally matching with election timings ) such as
  • Waiver of farm loans
  • Free electricity
  • Fertilizer subsidy
  • Minimum Support Price
But these are steps to reduce to impact of bad policies on this sector ,than a step to boost up the sector.Do we follow the same rules in any other sectors? We tax import of cars and two wheelers at 100% to support the local car manufacturing industry.Same is the case with alcohol , tyres etc. Even essential services such as health care are not controlled completly. Private hospitals are allowed to demand astronomical fees. But affordable health care is also made available through govt funded public hospitals. Similar policy can be followed in agriculture too.

What Should be done

Govt should decontrol the prices ,remove export limitations & add import restrictions (if necessary), so that farmers get right(or more) price for their products.This will make agriculture as a viable business in long term. Sustained higher prices for farm output will definitely percolate within the system and reach cultivators and agricultural labors in due course.For this to become reality, prices raise should be sustained for a longer period. Short term spikes of higher prices tend to in advantage for the middle men, and they never reach the intended recipients.Importantly steps should be taken to reduce the farm prices and retail prices by reducing the vast stretch of middle man acting in this industry.

One section of economists attributed the recent price hike in food products to NREGA - National Rural Employment Guarantee Scheme.Their argument was that increase in options to work drove up the wages , also of agricultural labors in rural area which in turn cause increase in cost of production and eventually increase in food prices. If this school of thought is to be believed then the converse should also be true, if food prices increase in a sustained manner it will in turn lead to increase in wages for rural workers and obviously to increase in their lifestyle

Off course this is not without any short comings.One section of people who will be drastically affected by this move will be the urban poor.They should also be taken care.Govt can strengthen the PDS (Public Distribution System) to provide them with affordable access to food .

Future ?

Comparing India with other far more developed countries will give a picture of what will happen in future in India.

Situation is obviously going to get worse from here. Our current GDP of of 8-9% and agriculture growth of 1-2% itself more than foretells the future. Better we take some affirmative steps soon to safeguard this industry and people dependent on it , than indulging in firefighting in a later stage.


“The revolution is not an apple that falls when it is ripe. You have to make it fall.”
- Che