Go Back   Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 27th January 2013, 19:04   #1141
ACM
Distinguished - BHPian
 
ACM's Avatar
 
Join Date: Mar 2008
Location: Mumbai
Posts: 4,152
Thanked: 2,450 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Approximations: (Fuel Prices and fuel Effeciencies are all approximate and a lot of the numbers have simply been rounded off for simplicity) The idea is to look at the bigger picture.

Lets have the numbers speak:

Cost of a Bus : Rs. 20,00,000 - 30,00,000 (Normal Public Transport Bus with Seats and w/o AC - not Volvo's)

kms per month : 125kms per day X30day = 3750kms / month.

Fuel Effeciency : 4 km / ltr for Diesel

Cost of fuel at current Rates : (3750 / 4) X 47 = Rs. 44,000 / month Approx
Cost of fuel at revised Rates : (3750 / 4) X 58 = Rs. 54,000 / month Approx

Cost of Driver + Conductor (Cost to Company Rates including insurance and Pension etc.) + management cost of company : Rs. 40,000 / month Approx

Maintenance Cost of Bus / Month : Rs. 7500 ( @ Rs. 2 / Km - Do remember a Bus has very expensive Tyres and an Oil Change for it's huge Engine will be a lot of ltrs even if done every 15,000 kms.)

Cost of Finance (Capital Cost of just the Bus) : Includes Depreciation of Rs. 25L over 10 years and Cost of Capital @ 10% Bank Interest over a 7 year EMI is 41,000 though over 10 years the EMI would be about Rs. 30,000 / month though no one would provide such a loan. But instead if we are to depreciate the vehicle over a straight 10 year life it works out to 2.5L / year = Rs. 21000 / month with the vehicle being close to scrap value at the end of it. This works out to about Rs. 50,000 / month including depereciation, cost of capital and residual value but still excludes the cost of other capital infrastructure for an organisation like BEST in mumbai for bus stops and Depots and office blocks.

Irrespective the Original opex per month: Rs. 44,000 + Rs. 40,000 + Rs, 7,500 + Rs. 50,000 = Rs. 1,41,500

The NEW opex per month: Rs.54,500 + Rs. 40,000 + Rs. 7,500 + Rs. 50,000 = Rs. 1,52,000

The change is = 100 X (1,52,000 - 1,41,500) / 1,52,000 = 8% Approx.

So if the current annual Bus expense of a person is Rs. 10,000 the new revised Bus Expense would be Rs. 10,800 : No really a game changer in my view considering the standard inflation figures that we see.

The Good bit is that over the next 3 years we would see the diesel vs petrol disparity go and people will still buy diesel vehicles but for the right reasons and the polictics of fuel hike will stop. Hope it all goes that way.

Disclaimer the values are all approximate and this is not to say that an increase of 8% will not hurt those who struggle to make ends meet but this is to give a balanced perspective to the whole picture as we forget that fuel is not the only component of the cost here. For Transport / freight calculations the value would be closer to 1% only as freight itself is not a major component of the cost of a good on an average and it would be at most something like 10% of 5% = 0.5% increase.

This has been blown up beyound proportion and the price differential has only benifitted rich farmers with a lot of powered farm equipments and pumps rather than the poor farmers or the Indian middle class.

Last edited by ACM : 27th January 2013 at 19:07.
ACM is offline   (8) Thanks Reply With Quote
Old 27th January 2013, 20:34   #1142
BHPian
 
acroback's Avatar
 
Join Date: Aug 2011
Location: CA
Posts: 314
Thanked: 125 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by WindRide View Post
There is something serious wrong with this government if it things its OK for public transport cos to pass on the higher fuel bill due to Rs.11 per litre hike (for bulk customers) to the common man utilising those services, while allowing that fuel guzzling SUV to run around on a meagre 50 paise per litre hike in fuel bill.

Its NOT "Theek Hai" Mr.PM.
It should be same for all irrespective of vehicle.
Such dual policy is detrimental and pointless.

If deficit is the issue, kill all wasteful subsidies including Diesel, kerosene, LPG etc.
acroback is offline   Reply With Quote
Old 27th January 2013, 21:52   #1143
BHPian
 
Join Date: Mar 2008
Location: Hyderabad
Posts: 858
Thanked: 296 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

State RTC buses start filling up diesel from retail pumps. Other bulk users like malls with diesel gensets, mobile towers etc procure diesel from retail pumps. That leaves only Railways. Pointless.
simplyself is offline   Reply With Quote
Old 27th January 2013, 23:20   #1144
Senior - BHPian
 
aaggoswami's Avatar
 
Join Date: May 2007
Location: Vadodara
Posts: 4,675
Thanked: 1,426 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Whatever we do or type, at the end of the day, IMHO, this rise in not required at all.

1) First of all, where is the most amount of diesel used ? If we have an answer, like lets, assume, railways. Then we cannot say that diesel fuel being used by private vehicles are not eligible for subsidy. This whole subsidy scenario was to extract more tax, etc. Transparency is missing.
To the best of my knowledge, apart from railways and trucks and public transport, a lot of diesel is being used in DG sets also.

2) Loss per litre to OMC. Why not cut on expenses of OMC in the first place ? If a firm is making consistent losses which amount to crores of rupees, they would definitely cut down on expenses. Lay off is also part of it. Why is this not happening ? OMC crying foul for loss ? IMO, they are not there to generate huge amount of profit in the first place. Very strict quality control is also required.
OMC in India which are govt. owned get the best crude, yet they make losses.
My point is that, irrespective of profit or loss, there is huge inefficiency in operations, along with presence of corruption. If this is eliminated, picture would become more clear.

3) Diesel is a fuel which will affect the entire economy on the whole. A person owning a bike will be using petrol for transport, but the price rise across all commodities would hit him. Insensitive price rise in the name of open to market rate coupled with lack of transparency does not make sense in a democracy which is already crippled under excessive load of crime and corruption.

4) At how many places diesel is being used in place of electricity must be calculated. This is one area which will again give out results w.r.t. government inefficiency in generating electricity and overall lack of development.

Cost of all fuels are going high, be it CNG or diesel or even petrol or essentials like LPG. What is the overall objective to be achieved is certainly not clear. If we read out the five year plans, its the same element we read earlier but with different words. We need a definite and precise direction to roll forward, not this sinking of ship ( which is currently being done ).

Last edited by aaggoswami : 27th January 2013 at 23:22.
aaggoswami is offline   (2) Thanks Reply With Quote
Old 28th January 2013, 02:40   #1145
Senior - BHPian
 
Join Date: Mar 2007
Location: Mumbai
Posts: 1,457
Thanked: 281 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by aaggoswami View Post
Whatever we do or type, at the end of the day, IMHO, this rise in not required at all.

2) Loss per litre to OMC. Why not cut on expenses of OMC in the first place ? If a firm is making consistent losses which amount to crores of rupees, they would definitely cut down on expenses. Lay off is also part of it. Why is this not happening ? OMC crying foul for loss ? IMO, they are not there to generate huge amount of profit in the first place. Very strict quality control is also required.
OMC in India which are govt. owned get the best crude, yet they make losses.
My point is that, irrespective of profit or loss, there is huge inefficiency in operations, along with presence of corruption. If this is eliminated, picture would become more clear.
Didn't we go through the same arguments in a different thread - http://www.team-bhp.com/forum/indian...ml#post2919075 (Diesel Price Hike - end of the market skew in favour of diesels?)
carboy is offline   Reply With Quote
Old 28th January 2013, 11:06   #1146
BHPian
 
Join Date: Jan 2012
Location: Bangalore,Coorg
Posts: 790
Thanked: 361 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

In economics there is a principle that says "there are only two ways to increase profit. 1) increase revenue. 2) decrease cost"

The government seems to be going down the route of decreasing cost, at least with regards to diesel subsidy. Hopefully they will now turn around and reduce their tax collection in some way or use the money for additional expenditure. The big problem with our government is that the majority of it's expenses wind up as black money or in Swiss banks with all the corruption.

All said and done though, the removal of the subsidy should be done across the board. Any subsidies then applied should be done selectively in a manner to benefit people. For example, if you subsidize public transport, then people will use it and it helps in congestion on the roads, pollution, time saving for people etc. Another use of the additional income would be to improve the infrastructure of the country (roads, electricity, water, phone connectivity etc).

I am happy to pay a higher price for goods due to higher taxation and lesser subsidies, IF, the money is spent wisely for the benefit of the people and country. Not how it is at present
pganapathy is offline   (1) Thanks Reply With Quote
Old 30th January 2013, 08:03   #1147
BHPian
 
Join Date: Aug 2006
Location: chennai
Posts: 308
Thanked: 110 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Looks like other arm of the govt. already knew how to tackle the dual pricing. Law makers are the law breakers. Morning I went to fill up my bike and saw 2 govt. bus queued up to fill the Diesel in a pvt. pump . The scene is the bus waiting with passengers. Now I am in doubt how dual pricing strategy gonna work. I am sure telecommunication companies now apply for POS through benami and get diesel for a cheaper price. If the other side of the govt can go to any extent in saving diesel cost, pvt company easily go even further than this. In the absence of stock verification I can see corruption, cut down 4~5 liters of diesel and get karcha for drivers and conductors. I was really saddened and felt really really bad after seeing this incident. Long live India.
vijaycool is offline   Reply With Quote
Old 1st February 2013, 11:09   #1148
BHPian
 
gomzi's Avatar
 
Join Date: Mar 2004
Location: SF Bay Area
Posts: 783
Thanked: 125 Times
Default

Quote:
Originally Posted by vijaycool View Post
Looks like other arm of the govt. already knew how to tackle the dual pricing. Law makers are the law breakers. Morning I went to fill up my bike and saw 2 govt. bus queued up to fill the Diesel in a pvt. pump . The scene is the bus waiting with passengers. Now I am in doubt how dual pricing strategy gonna work. I am sure telecommunication companies now apply for POS through benami and get diesel for a cheaper price. If the other side of the govt can go to any extent in saving diesel cost, pvt company easily go even further than this. In the absence of stock verification I can see corruption, cut down 4~5 liters of diesel and get karcha for drivers and conductors. I was really saddened and felt really really bad after seeing this incident. Long live India.
Dual pricing was always going to cause people to resort to any means to get the cheaper rate. Last night I went to fill CNG and saw about 4 - 5 ST buses queued up to fill up diesel, blocking traffic.

In today's paper I read that BEST buses will also start filling up at retail outlets starting next week, so expect longer lines to fill diesel. I don't think this is breaking the law though, its just a rational response to a very stupid pricing policy to keep operating costs low.
Rather than increase fuel prices govt should improve operating efficiency of the oil cos.

Last edited by gomzi : 1st February 2013 at 11:18.
gomzi is offline   Reply With Quote
Old 1st February 2013, 11:13   #1149
Distinguished - BHPian
 
sgiitk's Avatar
 
Join Date: Dec 2007
Location: Kanpur
Posts: 7,160
Thanked: 3,755 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

The oilcos are pretty nonchalant about it. They reckon that about six months the differential will become insignificant. One has to take into account the unofficial additive(s) in many bunks, and the possibility of getting bills for more than the actual fill into account.

However, with Brent also headed northwards the only thing saving the bacon is the improvement in the rupee to sub 53.50 levels.
sgiitk is offline   Reply With Quote
Old 1st February 2013, 12:10   #1150
Senior - BHPian
 
Join Date: Mar 2007
Location: Mumbai
Posts: 1,457
Thanked: 281 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

This post here http://www.team-bhp.com/forum/shifti...ml#post3030245 (Nationwide UID - will it work?) - it says you need Aadhar card for Subsidised LPG. Will they implement this for subsidised diesel also?
carboy is offline   Reply With Quote
Old 1st February 2013, 12:54   #1151
Senior - BHPian
 
Join Date: Jul 2008
Location: Bangalore
Posts: 2,031
Thanked: 381 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Again to reiterate this subsidy business is farce , Government earns around 30,000 Cr net from petrolium and dividends from OMC are extra . The real reason to give this eyewash 15000 Cr Subsidy rather then reducing tax are complex and explained earlier.
Just to give one example earlier the price to refinary was being fixed on import parity but not on export parity and this accounting exercise alone takes a lot of subsidy.
To think logically India has highest refining capacity east of the suez and has lowest refining costs so why exactly we should bother and compare with import prices of finished goods ( Diesel/ Petrol) and not fix as per the price we are exporting the finished products ?

Few months back on this thread I posted calculation 10% hike in Diesel will cause more then 10% inflation in primary and food items. Public memory is short and now it is claimed that inflation is under 10% but I just looked at the prices of some key food items 3/4 months back and now

1. Basmati Rice doobar then 50 - 75 Rs per KG now it is 100 - 150 Rs per KG.

2. Sona Masuri Rice which is consumed by majorty here was 25 to 31 Rs per KG , Now it is retailing for more then 50 rs per KG. There is no sudden spike in demand in 3-4 months nor there is any crop failure or natural calamity.

2. Milk prices in Bagalore were incresed by 4 Rs per liter that is around 20% and now there is further 6 Rs hike on cards. I don't have figures for other cities but it should be similar.

3. Pulses fruits and veg : Same story as (1) you can check the prices 4-5 months back and now.

4. Services such as school fee or hair saloons charges have also gone up.


Coming back to point of inflation , It looks surprising to everyone that how WPI remains in single digit when consumer prices are soaring and reason is very clear if we look at what is WPI , It has 64% of weight for manufactured goods which is dominated by inputs to industry like construction machinery , transformers etc.
Now everyone knows that prices are dictated by law of demand and supply and if consumer sentiments are low demand of industry for capital goods will be surpressed. So the effect will be seen further down the line when existing stocks are depleated.

This is one reason IMHO that government wants to cite only WPI and does not include services in the inflation index while services make 56% of our GDP.
amitk26 is offline   (7) Thanks Reply With Quote
Old 2nd February 2013, 08:02   #1152
BHPian
 
Join Date: Sep 2010
Location: Bangalore
Posts: 37
Thanked: 11 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by amitk26 View Post
Few months back on this thread I posted calculation 10% hike in Diesel will cause more then 10% inflation in primary and food items. Public memory is short and now it is claimed that inflation is under 10% but I just looked at the prices of some key food items 3/4 months back and now

1. Basmati Rice doobar then 50 - 75 Rs per KG now it is 100 - 150 Rs per KG.

2. Sona Masuri Rice which is consumed by majorty here was 25 to 31 Rs per KG , Now it is retailing for more then 50 rs per KG. There is no sudden spike in demand in 3-4 months nor there is any crop failure or natural calamity.

2. Milk prices in Bagalore were incresed by 4 Rs per liter that is around 20% and now there is further 6 Rs hike on cards. I don't have figures for other cities but it should be similar.

3. Pulses fruits and veg : Same story as (1) you can check the prices 4-5 months back and now.

4. Services such as school fee or hair saloons charges have also gone up.
I respectfully don't agree with the above figures. Every time I buy groceries (generally, from Reliance Fresh/Mart) I make a note of prices. Here is what I have noticed in the last 4-5 months:

1. Sona Masuri rice prices have increased dramatically from Rs 36-38 to 52-55. The reasons have been discussed aplenty in the MSM.

2. Sugar prices have been stable or marginally come down from Rs 37-38 to 35-36 (loose variety).

3. Toor dal prices have been stable at around Rs 72-75.(loose variety)

4. Coffee powder ( pure, from coffee day ) have remained stable at Rs 360/kg for quite sometime now.

5. Veg prices have also marginally come down but it always comes down seasonally during Jan-Feb so we can discount it.

6. Yes, services have gone up, but I think it is just jacking up prices with "inflation" as an excuse.
DigitalOne is offline   (1) Thanks Reply With Quote
Old 14th February 2013, 08:21   #1153
BHPian
 
bnzjon's Avatar
 
Join Date: Jul 2009
Location: Dubai
Posts: 836
Thanked: 124 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Another hike coming this weekend.

News Courtesy : The Economic Times
Quote:
NEW DELHI: State-run oil companies plan to raise petrol price by Rs 1 per litre and diesel by 50 paise a litre if they get the informal nod of oil minister Veerappa Moily, who has returned from week-long US trip on Wednesday.

Companies are suffering a revenue loss of more than Rs 1 a litre on petrol and more than Rs 10 on a litre of diesel because of northward movement of global crude oil prices, which was soared to a nine-month high close to $119 per barrel this month, executives said.

Indian Oil Chairman RS Butola said state oil marketing companies would "review" auto fuel rates this week. "We are following fortnightly (petrol and diesel pricing) cycle. That will be the time when we will again review prices," he told reporters after announcing company's financial results in the third quarter of current financial year. IOC's Q3 net profit jumped by 34 per cent at Rs 3,332 crore but it made a net loss of Rs 9,508 crore in nine months ended December 2012.

Butola said there was a decline in sale of bulk diesel, which is sold at market rates since Jan 17 after the government allowed companies to raise prices of subsidised diesel in a staggered manner and asked bulk buyers to pay market rates. Bulk diesel supply, which is sold directly by companies to consumers, constitutes 11 million tonnes of about 70 million tones diesel market.
bnzjon is offline   Reply With Quote
Old 14th February 2013, 15:29   #1154
Senior - BHPian
 
Join Date: Jul 2008
Location: Bangalore
Posts: 2,031
Thanked: 381 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by DigitalOne View Post
I respectfully don't agree with the above figures. Every time I buy groceries (generally, from Reliance Fresh/Mart) I make a note of prices. Here is what I have noticed in the last 4-5 months:

6. Yes, services have gone up, but I think it is just jacking up prices with "inflation" as an excuse.
Check this figure based on numbers from Government.
I will say they are still quite lower then ground reality but the trend is what I predicted, Inflation of food items is much higher then inflation of fuel.
Jacking up prices based on prevaling conditions and sentiments is exactly what is called inflation

amitk26 is offline   Reply With Quote
Old 14th February 2013, 15:59   #1155
BHPian
 
civic-sense's Avatar
 
Join Date: Dec 2009
Location: Bangalore
Posts: 705
Thanked: 752 Times
Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by amitk26 View Post
Check this figure based on numbers from Government.
I will say they are still quite lower then ground reality but the trend is what I predicted, Inflation of food items is much higher then inflation of fuel.
Jacking up prices based on prevaling conditions and sentiments is exactly what is called inflation
The info-graphic says annual rate of inflation. Not inflation before and after fuel hike.

Also as per your graphic the change in inflation between Dec 2012 and Jan 2013 is a paltry 0.23%. We have seen bigger swings in inflation in the past even without fuel price hikes.

Last edited by GTO : 20th February 2013 at 10:52. Reason: Please quote ONLY the relevant bits of a post. Quoting an entire long message inconveniences our mobile users
civic-sense is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Swift Diesel, Saga continues. The DIESEL experience! Part II 72k kms Update Page 182. Now SOLD! Jaggu Long-Term Ownership Reviews 2988 21st September 2017 11:10
BMW to drop prices due to increased localisation. EDIT: New prices announced Aditya The Indian Car Scene 38 10th July 2015 21:19
Hyundai Cut prices- New detailed prices. harry10 The Indian Car Scene 5 9th December 2008 00:45
Are these good prices for Tata\Fiat vehicles? Corporate Offer Prices sahakar The Indian Car Scene 15 8th July 2008 23:03


All times are GMT +5.5. The time now is 04:26.

Copyright 2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks