Add a new user:
useradd -m automation
The -m option would take care of adding a home directory for the user under /home
After adding a new user, I switched to the user and realized that the command prompt looks different. My own user had the command prompt like varun.verma@server-dev:~$ but for the new user, it only showed a $.
I looked through the changes in the /etc directory and found this different in the passwd file:
varun.verma:x:1002:1002:Varun Verma,,,:/home/varun.verma:/bin/bash automation:x:1007:1009::/home/automation:/bin/sh
I replaced the sh for user automation with bash and that did the trick.