Skoda Octavia Review: Many a times it so happens that we have a car in mind and given the first opportunity, will like to rush and buy it off the shelf like any other house hold item. However little do we appreciate the fact that we don’t buy a car everyday.
So here comes the necessary due diligence that needs to be done while comparing cars before the final decision to go for one is arrived. At N4M, we endeavor to take one car at a time and then compare it with the other competing cars from different stables.
Car under Review – Skoda Octavia: The black car on the street, Octavia from the brand Skoda. Skoda brought in the new Octavia, a facelifted version of the car that was last introduced in 2013. At a price tag of Rs 16.03 lakh, ex-showroom, Delhi, the new car costs almost the same as the old one.
Now to mention a few parameters that are a must considering, if you ever thought of buying Skoda Octavia. The cars that fall in the comparable D segment are the Hyundai Elantra, Toyota Corolla Altis and the Volkswagen Jetta. Let’s check out how Skoda Octavia fares against its competition, more so on the basis of price, specifications, after sales maintenance and some more brand specific features.
To your question, “Which car out of those mentioned above, to buy?”, we first compare Hyundai Elantra 2.0 S vs Skoda Octavia 1.4 TSI MT Ambition, followed by the others.
Skoda Octavia Versus Hyundai Elantra.
The Hyundai Elantra 2.0 S (base) is the newest car in the lot. The new platform handles far better than the previous car and it starts out at below Rs 12.99 lakh, which is way cheaper than the Skoda Octavia 1.4 TSI MT Ambition (base) placed at 16.03 lakh. The claimed mileage for the Hyundai Elantra Diesel is 22.5 kmpl and for the Skoda Octavia Diesel is 21 kmpl. In technical specifications, Hyundai Elantra 2.0 S is powered by 1582 cc engine whereas Skoda Octavia 1.4 TSI MT Ambition is powered by 1968 cc engine.
Also, the distinct difference in build quality is evident in the heavier Octavia, but the advantage quickly turns to a disadvantage on Indian roads as the front heavy Octavia while navigating some tough speed-breakers, often ends up hitting the road from the front side underbelly. This happens mainly by virtue of the inertia due to a disproportionately heavier engine. It often leads to the cracking up of the Engine oil chamber from below and the leakage of the entire Engine Oil. The Oil chamber cast is not easily available at service workshops or dealers and so has to be flown in, thereby increasing the downtime. Many a times it has been seen that after the change of the Oil chamber, dust particles end up in the oil chamber, leading to deterioration over time and ending in complete engine seizure.
The Hyundai has a fancier equipment list while the Octavia gives all that you need sans the fancy elements along with more power and a dual-clutch gearbox in both petrol and diesel versions.
As for the after sales maintenance, it is one of the most important part of any decision making to buy a vehicle, coz you deal with the maintenance on a daily basis for the rest of the years that you retain your vehicle. So comparatively, Hyundai with its Korean origins take care of the maintenance issues just like the kaizen obsessed Japanese do. On the other hand Skoda even with their European origins have let the maintenance slip out of their hands, thereby depending heavily on the local dealers to satisfy the clients. The unsatisfied clients, in case wanting to escalate their problems of maintenance find themselves in a fix as the company directs the complaints back to the local dealer for resolution, washing their own hands off it.
Skoda Octavia Versus Volkswagen Jetta:
As a brand Volkswagen earned its name and fame across the world, much before Skoda was even heard of. So, for the brand reliability and fan following, Volkswagen remains far ahead of Skoda. However the Volkswagen Jetta as a car still gets compared as a cousin to the German Octavia. Built on the same platform and powered by the same mills, the overall performance is almost similar.
Not considering the brand value of Volkswagen for a minute, the car Octavia by itself reflects more flair in its looks, compared to the Jetta and is also a bit more luxurious looking than the Volkswagen. Also, the Skoda is a few centimeters longer than the VW Jetta, offering more interior and boot space but for an elevated price difference of around a lakh Rupees.
On the maintenance front though, to take care of its enhanced brand, Volkswagen seems to have gone in for more R&D and upgradations so as to minimize the problems by eliminating all possible repetitive snags and / or part failures. On the other hand Skoda Octavia performs dismally when it comes to repetitive snags in the vehicle and their handling at the hands of its customer care team in India. The top echelons of this team work out of Mumbai.
Skoda Octavia Versus Toyota Corolla Altis:
The Toyota Corolla Altis with its Japanese origins score a point or two in terms of efficiency and reliability. However on many other parameters like the performance, panache or features, it fares neck to neck as the Skoda Octavia. It’s upper version with 1.8-litre petrol at 138 bhp though falls short against the 1.8-litre turbocharged petrol of the Skoda that certainly is a notch above the Corolla
The other area where the Corolla scores fairly high against the Skoda Octavia is the ‘after sales maintenance’. While Toyota, going by the Japanese eye for minutest of perfections, has literally left nil flaws to be taken care of in maintenance, thereby taking it close to claiming a zero maintenance vehicle. On the other hand Skoda Octavia is yet to perfect and overcome its problems through modifications or recalls. The most important and perceived problem area as per most customers is its ‘Clutch and Gearbox’ assembly. The complaints regarding the same can be googled in plenty on the net with the Gear and Clutch plate assembly going unserviceable in the first year itself and sometimes within the first 10,000 miles of coverage. N4M Media also happened to get hold of specific cases where the Gear and Clutch Plate assembly of the Car had to be replaced thrice in succession, with each time failing in just a couple of thousands of kilometers of vehicle running.
With faulty driving having been ruled out in all the cases, possibility of faulty workmanship at the local levels can’t be ruled out. Even doubts on manufacturing lacunae in clutch plates being supplied by the company or its vendors remain high. The onus of investigating though lies with Skoda as the cases are not isolated and the outcry too high to be ignored.
Top seven Indian IT companies experienced a whopping 43 per cent drop in their H-1B visa approvals between 2015 and 2017, a US think-tank has said.
The National Foundation for American Policy in a report said that the 8,468 new H-1B visas for Indian-based companies in the financial year 2017 equaled only 0.006 per cent of the 160 million in the US labour force.
The top seven Indian-based companies received only 8,468 approved H-1B petitions for initial employment in FY 2017, a decline of 43 per cent for these companies since FY 2015, when it received 14,792 H-1B visas.
Given that 199,000 applications were filed in FY 2017 for the FY 2018 cap year 105,000 in excess of the FY 2018 H-1B annual limit even if none of these companies received new H-1B visas the annual limit still would have been reached on the first day of the April filing period, it said.
“The data indicate the problem is not which companies are receiving H-1B visas, which some contend, but that the 85,000-annual limit is too low for an economy the size of the United States,” it argued.
Based on the H-1B visa data obtained from the US Citizenship and immigration Services (USCIS), the foundation said that the Tata Consultancy Services (TCS) received 2,312 H-1B visas in 2017 as against 4,674 in 2015, registering a drop of 51 per cent.
Infosys, during the same period saw a whooping drop of 57 per cent from 2,830 in 2015 to 1,218 in 2017. Wipro received 1,210 H-1B visas in 2017 as against 3,079 in 2015. Among the seven Indian-based companies the H-1B approval of Tech Mahindra went up from 1,576 in 2015 to 2233 in 2017.
In its analysis, the National Foundation for American Policy said that the drop in H-1B visas for Indian-based companies is due to industry trends toward digital services such as cloud computing and artificial intelligence, which require fewer workers, and a choice by companies to rely less on visas and to build up their domestic workforces in the United States.
In most cases, companies require fewer people per project, it argued.
Also, like all companies, including US companies, restrictions on visas may result in more work being performed outside the US, which is the unintended consequence of many immigration restrictions in a global economy. Indian-based companies, of course, must compete for the same relatively limited pool of tech talent in the US as other companies, it said.
The foundation said, corporate clients of both the US and Indian-based IT services companies are requesting digital engineering and more sophisticated services, including better data analysis, that require fewer workers and more advanced technology, and this is reflected in the H-1B visa numbers.
While Cognizant, an IT services company headquartered in Teaneck, New Jersey, had the most H-1B petitions approved for new employment in FY 2017, with 3,194, that represented a decline of 800 approved petitions, or 25 per cent from FY 2016.
Further, five of the seven top Indian-based companies saw declines in FY 2017 from FY 2016 Infosys, Wipro, HCL America, Larsen & Toubro and Mindtree.
Only TCS, with an increase of 13 per cent, and Tech Mahindra, which increased by 42 per cent, had more H-1B petitions for initial employment approved in FY 2017 than in FY 2016, it said.
At a time when the GST Implementation hasn’t even been fully implemented across India, with bugs and rates constantly being tweaked, the very country that India had sought to emulate for its GST implementation has decided to do away with GST in totality.
Although the development in Malaysia may or may not have any direct impact on India, experts advise that the Indian government should closely study the Malaysian experience, take ‘necessary steps’ and come up with additional reforms to make GST acceptable to the masses.
Malaysia’s finance ministry on Wednesday (May 16) said that the 6 per cent Goods and Services Tax (GST) will be zero-rated from Jun 1, effectively abolishing it until further notice.
In a statement, the ministry said the move does not include the goods and services listed in the Goods and Services Tax (Exempt Supply) Order 2014, which will remain exempted from GST.
“At the same time, businesses must ensure that prices of goods and services comply with the Price Control and Anti-Profiteering Act 2011 at all times,” it added.
The announcement comes a day after former central bank governor Zeti Akhtar Aziz told Malaysians not to expect the GST removal to happen overnight, saying that it may require parliament approval.
Great Game India, a quarterly journal on Geopolitics & International Affairs tweeted, “MalaysiascrapsGST! This should be a warning bell to Indian policymakers and so called experts.”
Prime Minister Mahathir Mohamad, who won last week’s general election, had vowed during the campaign to get rid of the 6 per cent GST to address the rising cost of living. Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.
Najib’s government had planned to collect 43.8 billion ringgit (US$11.05 billion) in 2018 in GST, about 18 per cent of total revenue.
Bernama quoted Mahathir as saying that excess GST collected will be returned to those who apply for reimbursement. This is because the government has collected more than necessary, he added.
“The directive has been issued so that we ( the government) do not collect anymore GST. We will try to pay back (the excess collected) to them (the people), “he said.
He said he had attended a briefing on how the GST would be abolished.
With respect to fuel prices which are reviewed every Wednesday, Mahathir said: “There will be no ups and downs … present prices will stay. If there is a need, we (the government) will subsidise.”
Many NRI’s and Indians had organized Hawans and special prayer meets for Donald Trump to come out victorious and that he did. However with Trumps ultra-nationalistic policies facilitating the Americans and shunning those from outside, the worst sufferers have been Indians, including those well wishers who had prayed for him then.
As per the trends and stats available, the Indian IT professionals have started facing the consequences of US government’s clampdown on work visas. As a consequence to that, major Indian IT firms have stepped up local hiring in the US to meet business demand.
Leading IT firms including Infosys, Tata Consultancy Services (TCS) and Wipro have gone on a hiring spree in the US itself. These firms were once known for sending the Indian IT workers to client locations in the US. With the Trump government’s new moves, these companies are now being forced to change their traditional business model.
The proportion of sales made in the North American market has also fallen in the year that ended on March. TCS has slipped its market share by 2.4% to 51.6%, Infosys has slipped by 1.5 points to 60.4% while, Wipro has fallen by 1.3 points to 53.4%.
In fact, the IT firms had already slowed down sending their domestic workers to the US. The trend accelerated as the Trump government signaled its approach towards work visas. The US government’s toughening requirements for H-1B work visa has made it difficult for the traditional IT business model to survive.
TCS, Infosys, and Wipro filed only 40,000 H-1B visa applications in 2017, which is down by nearly 20% in year-on-year basis. Infosys has announced its plan to hire 10,000 new workers in the US. The IT firm will hire 1000 to 2000 new technicians at its advanced research and development hubs in the four US states including Indiana and North Carolina.
IT leaders have realized the need of localization of talent. Indian IT industry survives on the traditional IT services in software deployment and related processes such as testing. As these processes are becoming automated, the growth prospects are in question for the leading IT firms. Most of the IT leaders are expanding their verticals in emerging fields such as AI, data analytics, and the internet of things (IoT).
President Trump’s ‘Buy American, Hire American’ executive order is working well in the favor of Americans. The jobs that were earlier outsourced to immigrant Indian workers are being allocated to the US citizens. However, the US economy still requires the highly-skilled foreign talent for challenging roles, but the numbers have certainly dwindled.
Much therefore, remains to be seen in the years to come as major economic upheavals take place across continents. With many a small factors like this H1-B visa fallout, cumulatively the impact on the Indian Economy can also be felt with much of the lavishness that was prevalent amongst the Indian having subsided in the last 4 years. The the next couple of years are worth a watch.
Even performing Aartis or celebrating US President Donald Trump’s birthday did not deter the Trump administration from the harsh stance taken by it to safeguard its own National interests.
Close on the heels of the Trump administration’s zero tolerance policy on immigrants which has led to an increase in the number of family separation incidents at the border, another policy is set to be a reason of worry now for foreign workers, particularly Indians, working in the United States. The Trump administration now has plans to withdraw the Obama-era H-4 rule that grants work authorization permit to spouses of H-1B visa holders.
Many Indian-American spouses will be affected by such a move when it officially comes into effect. Removing H-4 Dependent Spouses from the Class of Aliens Eligible for Employment Authorization, as revealed in the Department of Homeland Security’s Unified Agenda in the federal register notification of its semi-annual regulatory agenda.
This notification published on Monday proposes to remove certain regulations for H4 visa holders and deny them employment opportunities in the country. This proposed rulemaking or Notice of Proposed Rulemaking (NPRM) is expected to be published in June. The U.S. Citizenship and Immigration Services (USCIS) has insisted that no such decision around H4 visas will be considered as final until the rulemaking process is finished. USCIS will also be putting this proposed rule for public comments before making it a rule, as revealed by a USCIS official to PTI.
“The agency is considering a number of policy and regulatory changes to carry out the President’s Buy American, Hire American Executive Order, including a thorough review of employment-based visa programs”, Michael Bars, USCIS Spokesperson told PTI.
USCIS is focused on safeguarding the integrity of our immigration system and ensuring its faithful execution so that the wages and working conditions of US workers are protected,� he added.
In another related development, a representation of Indian-Americans who are in queue for their Green Card met Congressman Paul Tonko in Albany, New York. They pleaded for a quick reform of the Green Card backlog and requested the Congressmen to prevent this proposed rule that will rescind employment authorisation for H4 visa holders.
US President Donald Trump’s plan to ban spouses of high-skill visa holders from working will likely push 100,000 people out of jobs and negatively affect the visa holders and their employers, according to a new research study.
The Trump Administration has been tightening the rules for H-1B visas, which allow foreign workers to take jobs in the US for several years, and plans to revoke the ability of spouses to work as part of the effort. In that context, Christopher J L Cunningham of the University of Tennessee at Chattanooga and Pooja B Vijayakumar from the Kemmy Business School at the University of Limerick set out to study the implications of such a policy change.
They found that such a shift would likely isolate spouses socially, raise domestic tensions and strain the family’s financial resources. It would also probably hurt the visa holder’s satisfaction and increase the risks that they continue in a foreign posting. The cost of failed expatriate assignments ranges from $250,000 to $1 million, in addition to indirect costs, they wrote.
“Policy changes like the one being considered for America are often made in the absence of complete information that might help policy makers better understand the true breadth of likely consequences,” the study said.
The US began allowing spouses of H-1B visa holders to work in 2015, under the preceding Obama Administration. For their research, the authors studied the experiences of H-1B families in 2014. They contacted 1,800 Indian expatriate to participate in the research and the final sample consisted of 416.
The work visa programs, which date back to 1952, were originally designed to allow US companies to hire workers from abroad temporarily when they couldn’t find qualified Americans. But the programs evolved with many allegations that companies, particularly India’s outsourcing giants, had been abusing the visas to get less expensive labour. Trump came into office vowing to overhaul the programs and protect American workers.
In that context, Trump’s Department of Homeland Security began the process of reversing the eligibility of H-1B spouses to work. Technology industry groups — which represent Google and Amazon.com Inc among others — have pushed back against the plan, arguing it will hurt spouses, typically women, as well as the visa holders.
H-1B visa holders explained myriad problems when spouses couldn’t work. “Very unfair to her, so going back to India,” one told the researchers. “My wife is frustrated that she is unable to further her career,” said another.
The researchers said that a reinstated ban likely “will be more critical and difficult for expatriate families than what was experienced in 2014, as many of these individuals who were temporarily benefited by the previous presidential administration’s immigration policies may have, in this time, bought a home or started their own businesses.”
Cunningham specialises in industrial, organisational and occupational health psychology at the University of Tennessee at Chattanooga. Vijayakumar is a researcher currently studying expatriation and cross-cultural management.
On July 11, the White House announced plans to impose additional tariffs of 10% on $200 billion worth of Chinese exports, escalating the trade war between the U.S. and Asian suppliers, but potentially improving the future for Indian suppliers. The announcement was made very soon after that of the 25% tariff rate against $34 billion of Chinese goods, which is predicted to affect a vast array of consumer goods.
Restoration Hardware, Williams-Sonoma, and other prominent furniture stores that import everything from sofas to chairs, tables, and beds, would take a big hit, according to Goldman Sachs. The tax additionally affects the textile, handbag, consumer goods, seafood, agriculture, and appliance sectors. Could this be good news for Indian and other importers of furniture to the U.S.?
How Badly will Furniture Providers be Affected?
China currently provides the United States with 65% of its imported furniture, amounting to around $28 billion. Stores like Restoration Hardware, however, import up to 77% of their goods. Indeed, there are many stores across the United States that sell Chinese- as well as nationally-made furniture items built to exacting standards yet sold at a reasonable price.
These days, interior design is about so much more than necessities, with buyers expecting to pay good prices for basic necessities such as beds, dining tables and chairs, but also for the little luxuries that boost comfort and aesthetics. Items such as wall-fitted heating devices and fireplaces, or movable heating units, are highly solicited by those furnishing their homes for the first time, thanks in no small part to their affordability and visual appeal.
Fears have arisen that by raising costs on imported items, locally and nationally manufactured items may also see their pricing affected.
India a Solid Exporter of Furniture to the U.S.
Asia supplies over 70% of imported wooden furniture to the U.S. Although China is dominant, India, Malaysia, Indonesia, and Vietnam are popular suppliers. Sears is one company that is showing great interest in an array of Asian countries. For instance, just 10 years ago, the company obtained 80% of its retail chain needs from China. Today, China only supplies 40% of their needs, with countries such as India or Vietnam making their presence felt.
How Will Furniture Companies React?
Large stores like Restoration Hardware essentially have two choices: changing their suppliers, or adapting prices accordingly. Goldman Sachs feels that because the tariff is “only 10%”, stores may continue to rely on their overseas suppliers, since costs would still be considerably lower than having to find alternative suppliers. Many stores are additionally known for having a characteristic style, and the comfort of dealing with suppliers who know and match their expectations may be hard to forego. However, smaller stores for whom 10% may seem like a considerable amount, could potentially turn their eye to India and other suppliers.
El-Erian on the Trade War
Allianz chief economic adviser, Mohamed El-Erian recently told CNN that the raising of tariffs was part of “ a negotiating and posturing process and not an end in itself.” He noted that although there was a risk that the U.S. could be embarking on “a very damaging trade war”, this called also be a ‘Reagan moment’. In the Reagan era, the U.S. took part in a military spending race that the United States was destined to win. He noted that the U.S. would be less damaged less than other countries in the trade war, but if its stance prompted other countries to engage in negotiations, the U.S. could actually come out victorious.
It remains to be seen whether or not raised tariffs affecting the furniture and other industries will see the U.S. in a better bargaining position in the long term. What is clear is that those seeking to furnish their home in the short terms should look into making earlier purchases, before the effect of the tax hike hits their pockets. The design industry waits with bated breath to see the effect on pricing at some of the nation’s biggest stores.
As the concerns over H1B Visa holders and aspirants grow even murkier, its another day at the office for the Trump Administration. Another H-1B controversial memo comes out. The writing is on the wall, it’s not going to be an easy road for Indian techies who want to work in the United States.
This memo in question has probably the biggest potential to jeopardise the career prospects of several Indian H-1B visa holders or the ones who are currently in the queue to get their visas approved.
In a policy memo issued on June 28, the United States Citizenship and Immigration Services (USCIS) will start issuing NTA (Notice to Appear) letters to any person whose application for H-1B visa application is denied. Such visa holders will not be deemed to be staying illegally in the United States.
During the Obama Administration, an Indian techie with a H-1B visa had the option of returning to India after the rejection of his visa extension application. In the earlier situation, he wouldn’t have got the NTA notice, whereas now through this new USCIS policy they will be considered as illegally staying in the United States after the denial of visa extension and the expiry of the original term of stay as mentioned in Form 1-94.
Such a status will mean that they will not be able to leave America, till the time an immigration judge has heard their case and decided it. On receipt of the NTA letter, you will have to stay in America till the pendency of the outcome of such a case and will not be able to return to India.
That’s added pressure and humiliation, considering that you are no longer employed, have been tagged as an illegal resident, and now need to face deportation proceedings. If you decide to leave the country, you will have to face a 5-year ban on re-entry to the United States.
As many as 7 lakh Indian techies working in the US on H-1B visas will be affected by such an order. All the recent actions of the Trump administration towards tightening of the H-1B work visa norms has already put cost pressures on Indian IT firms with onsite hiring costs piling up. High operating costs will soon force IT companies to rethink their approach and perhaps make them rethink about their US operations. If that happens, will it really serve American interests? Let time be the judge.
Industrialist Kumar Mangalam Birla today warned of near-term headwinds for the economy ranging from oil prices to the impact of a global trade war.
“THE ONGOING GLOBAL TRADE WARS, MORE SO BETWEEN THE U.S. AND CHINA, ARE WORRISOME AND WILL HAVE A SPILLOVER NEGATIVE EFFECT ON OUR ECONOMY.” KUMAR MANGALAM BIRLA
“There are near-term challenges. Rising oil prices and inflation, firming bond yields and a widening current account deficit are areas of concern,” Birla told shareholders at the annual general meeting of Ultratech Cement Ltd.
The present positive outlook gets dimmer when one views the increasing trade protectionism, rising crude prices, geopolitical risks and the uncertainty about tightening monetary policies in the advanced economies, Birla said.
He noted that the economy has shown considerable resilience to the transitory effects on demonetisation and Goods and Services Tax rollout, adding that infrastructure projects like Bharatmala, new airports and metros, along with affordable housing and smart cities will stoke growth in the medium-term.
Birla said that the domestic cement industry has seen demand pick-up after seven years of tepid growth. That’s being driven by the government’s thrust on infrastructure development. Revival of rural housing demand and push to low-cost housing have supported strong volume offtake, he added.
He informed the shareholders that Ultratech has submitted a resolution plan for acquiring Binani Cement. If it goes through it will help the company meets its the long-term strategy of expanding, growing and consolidating its business in Rajasthan and Gujarat.
The Special Investigation Team (SIT) on black money has recommended the central government to cap the cash holding limit at Rs 10 million (Rs 1 crore) instead of its earlier suggestion of Rs 2 million (Rs 20 Lakh).
The SIT has also recommended that the entire amount found in seizures crossing that limit should go to the government treasury, Justice (retired) M B Shah, who heads the SIT on black money, said on Thursday.
The latest recommendations come after the earlier suggested limits of Rs 1.5 million and Rs 2 million were found to be too low.
“We have recommended that the cap on cash holding should be Rs 10 million. We have also recommended that the entire amount seized above the cash holding limit of Rs 10 million should go to the government,” Justice Shah said.
According to the existing rules, an offender can retrieve seized cash by paying 40 per cent income tax and penalty.
The recommendations have come after huge amounts of cash were seized in recent search operations by tax authorities in the country.
Quick to counter, the Social media was abuzz discussing on the move in the light of Prime Minister Narendra Modi’s one of the opening pledges to bring back black money. A couple of tweets sum up the mood of the public.
Gaurav Pandhi, a political activist was quick to take a jibe at the SIT recommendations.
Modi Govt's War Against Black Money — consider as little amount possible as black money. Problem solved.
Instead of 2 mn, cap on cash holding increased to 10 mn. Only the amount found in seizures crossing that limit would now go to Govt treasury. Lolhttps://t.co/KCHap1elNv
Another familiar face on the social media circles, more specifically tweeting some intelligent stuff on the net, Sonali Ranade has this to say about the move.
The Income Tax sleuths had on July 16 searched over 20 premises of a firm engaged in highway construction and its associate companies in Tamil Nadu and seized Rs 1.6 billion cash and 100 kg of gold.
Justice Shah had earlier suggested the cash holding limit to be at Rs 1.5 million. However, later he had recommended raising the limit to Rs 2 million.
The SIT was formed by the central government in 2014 on directions of Supreme Court.
The panel has been continuously suggesting anti-black money measures to the government.
Close on the heels of creating hurdles for spouses of H1B visa holders to acquire U.S. visas, the Trump administration is now coming with another rule which will make it difficult for IT companies in the U.S. to hire highly skilled foreign workers under the H-1B program.
Starting September 11, 2018 this new rule will empower the U.S. Citizenship and Immigration Services (USCIS) to deny visa applications that are incomplete or have errors. Even clerical errors or typographical errors could lead to such a situation.
Under this new rule, applicants won’t get another opportunity to furnish updated documents. Earlier, USCIS had to issue a Request for Evidence (RFE) receipt over such rejections, thereby giving an opportunity to the applicant and the sponsoring company to furnish additional details as evidence. This policy has been rescinded and a denial could mean a permanent denial for such applicants.
USCIS is an agency under the U.S. Department of Homeland Security (DHS) and was formed in March 2003 with a mandate to administer and oversee the naturalization and immigration process. Such arbitrary powers of enforcement have been given for the first time to this agency and a clear sign that the incumbent administration under President Donald Trump wants to enforce its poll promise of ‘Buy American, Hire American’ at all costs.
These frequent changes in policies by USCIS is bound to be affect US IT companies who not only hire foreign tech talent for cost reasons but also the fact that there exists a serious shortage of STEM skills in the U.S. The tell-signs are there. A recent development indicates that Microsoft may move jobs overseas over Trump’s immigration policy.
Another rule expected to be enforced by the USCIS from August 9, 2018 would now change the approach to calculating the “Unlawful Presence Days” of such students once their applications have been denied. This rule issued through a memo released on May 10, defines how students in F, J or M status (including F-2, J-2, M-2 dependents) would now start accruing unlawful presence if they fail to maintain their status.
The memo states, “USCIS is dedicated to our mission of ensuring the integrity of the immigration system. F, J, and M nonimmigrants are admitted to the United States for a specific purpose, and when that purpose has ended, we expect them to depart, or to obtain another, lawful immigration status,” said USCIS Director L. Francis Cissna. “The message is clear: These nonimmigrants cannot overstay their periods of admission or violate the terms of admission and stay illegally in the U.S. anymore.”
America’s IT services sector is clearly not happy with these developments and one such company ITServe has even filed a lawsuit against US government for sudden rule changes denying foreign STEM workers an opportunity to work in the United States.
The Congress today alleged that “23 persons” involved in bank frauds to the tune of Rs 90,000 crore fled the country during the BJP rule and dubbed it as party which is “more loyal to a con-man than to a common man”.
The opposition party said “the possibility of central government’s hand in relocation of 23 fugitives abroad in past four years cannot be ruled out” and demanded an impartial probe into the issue.
Addressing a press conference, Congress leader Jaiveer Shergill targeted the government over businessmen like Vijay Mallya, Nirav Modi and Mehul Choksi fleeing the country and said “this proves beyond doubt that Modi government is not a guardian or protector of public money but a travel agency facilitating fraud and happy safe flying of willful bank loan defaulters”.
Quoting data in “public domain and information sourced by various activists through RTI”, Shergill claimed a rise in bank frauds and “flying fraudsters”.
He claimed that the total number of banking fraud cases from year 2014-2018 (up to March 1, 2018) was 23,000– in 2014-15 it was 4,639 cases, 2016-17 had 5,076 cases while in 2017-18 there were 5,152 cases.
Shergill said that the total amount involved in banking scams was Rs 90,000 crore. In 2014-15 the amount was Rs 19,455 crore, the next year it was Rs 18,698 crore, 2016-17 it was Rs 23,933 crore and in 2017-18 it was Rs 25,459 crore.
“Total number of persons/fugitives (involved in the banking scams) who fled the country was 23. Number of investigations launched to discover how these 23 fugitives escaped – zero and the number of fugitives brought back to India by BJP Government – zero,” he alleged.
“The manner in which industry of banking scams’ has flourished and outbound traffic of scamsters’ has increased, it is clear that BJP is more loyal to con-man’ then to a common man. BJP provides the ‘chor darwaza’ (escape door) to all willful defaulters looking to run away with public money,” he alleged.
“Ease of looting and fleeing India was promoted” instead of ease of doing business, he alleged.
The Congress said it wanted a thorough impartial investigation “with respect to escape of 23 fugitives under Prime Minister (Narendra) Modi’s watch” and into what it alleged was the “BJP-fugitive nexus”.
To paraphrase Giacalone et al, “Workplace spirituality is a framework.. that promotes employees’ experience of transcendence through the work process, facilitating their sense of.. connected to others in a way that provides feelings of completeness and joy.”
In short, spirituality makes us feel like our work has meaning, both to ourselves and others. It gives us the morality we use in our business decisions and is just as important in modern business as ever.
How far a business is willing to go
The discussion of where spirituality fits in the workplace isn’t new. The most commonly accepted idea is that spirituality gives us our regulative ideals. What we believe informs what we consider normalcy, and during our work or business decisions, we internalize that normalcy. We then pursue the course of action that meets what our spirituality tells us is good or best, shaping our overall sense of business morality. Thus, it also affects the success of our business.
Spirituality can encourage employees to be healthier
Spirituality in business has a practical health benefit. One study asked a group of citizens, some of whom were spiritual and some of whom were not, to report on their health to the researchers. Those who were more spiritual were more likely to step forward and admit their poor health habits, likely due to a belief that they shouldn’t be dishonest. The researchers also noted that the spiritual citizens who were honest were less likely to be sick over the study’s length. For overall health, it is important to find tools or methods to increase self-reflection such as meditation or tarot readings and have time to do them on a regular basis.
Photo by Erik Brolin on Unsplash
Spirituality encourages cooperation in business so all benefit
Spirituality is different from religion, as it refers more to a belief that there is more to life than the self or the material, whereas religion attempts to give the exact form to this belief. To that end, a cynical view of spirituality is that it is similar to the instinct that tells us to help each other for the good of the collective species. Regardless of its interpretation, spirituality can push employers or employees to focus on the overall health of the company, rather than their own short-term gains.
Spirituality is a driving force in modern business. It encourages you to place the business, your fellow employees, or others above short-term gains even if you may not benefit from it personally. It informs the morality of workers, lowering the chance they will cheat each other or act selfishly. And it helps inform what workers are or are not willing to do, which can shape what opportunities a business pursues, and decides whether your business is portrayed positively or poorly.
President Donald Trump has said that he wants people with merit to enter the United States, a move that can help technology professionals from countries such as India.
“I’m very tough at the borders. We’ve been very tough at the borders. People have to come into our country legally, not illegally. Legally. And I want them to come in on merit,” Trump told reporters at the White House on Saturday.
Responding to a series of question on illegal immigration, the president reiterated that he wants people based on merit, a move that can help technology professionals from countries such as India.
“What I want is merit. I want a lot of people to come in. We have great car companies entering our country again. This hasn’t happened for 35 years. We have companies like Foxconn going to Wisconsin with a massive, massive plant,” he said.
“We need people coming in, but we want them to come in on merit. We want people that are going to help us. It’s very important,” Trump said.
Observing that immigration is not tricky to him, he insisted that the administration and the Congress have to do the right thing whether there’s an election or not.
New York By Night, United States
He opposed the chain migration policy and said, “If that’s a bad policy, then guess what, a lot of bad things are going to happen. But a lot of people agree with me. I would say a vast majority of our country agrees. They don’t want criminals coming into our country. They don’t want people that they don’t want in the country that aren’t going to help us as a country. They don’t want these people coming in. So we have a very strong policy.”
“The one thing that really has changed over the last couple of years since I’ve been President — our country is doing so well, even with real interest — not with false interest rates. Zero interest. Anybody can do well with zero interest. We’re the hottest country in the world, economically, by far. You take a look at us compared to China, compared to everybody else, we’re the hottest country in the world. A lot of people are trying to come in. Our border security, our ICE, our law enforcement is doing an incredible job,” he said.
As many glitches and bugs keep coming to the fore in its effective implementation, the Goods and Services Tax (GST) collection in November dropped to Rs 97,637 crore, lower than Rs 1 lakh crore collected the previous month.
This dip could be more of a worry for the Modi government at the centre than the states as the latter are kept covered and compensated for any shortfall from 14% annual growth.
Statistically, the total number of GSTR 3B returns filed for October up to November 30, 2018, is 69.6 lakh, the finance ministry said in a statement. Compensation released to states for August-September stood at Rs 11,922 crore.
Of the Rs 97,637 crore collected, central GST (CGST) collection is Rs 16,812 crore, state GST (SGST) is Rs 23,070 crore, integrated GST (IGST) is Rs 49,726 crore (including Rs 24,133 crore collected on imports) and cess is Rs 8,031 crore (including Rs 842 crore collected on imports).
The government has settled Rs 18,262 crore to CGST and Rs 15,704 crore to SGST from IGST as regular settlement.
The total revenue earned by central government and the state governments after regular settlement in November 2018 is Rs 35,073 crore for CGST and Rs 38,774 crore for SGST, the ministry added.
The GST collections stood at Rs 1.03 lakh crore in April, Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July, Rs 93,960 crore in August, Rs 94,442 crore in September and Rs 1,00,710 crore in October.
Although the GST collections have shrunk vis-a-vis the earlier month, but the solace for some in the government is that it is higher than the average monthly collection in the year and thus could eventually meet the target of 1 lakh crores per month.
On the contrary, ordinary prudence demands that any tax collections by the state whether direct or indirect, should show a rising curve, howsoever small the percentage rise may be. This though remains subjective to any abnormal swings due to likes of natural calamities such as Kerala Floods or any unprecedented happenings. This is the same “Rising Graph” measure that financial institutions use as one of the many input in their algorithms by including the annual returns of a company for the past 2 to 3 years in determining the health of a company and thus its effective eligibility for loans or picking up stakes.
Despite all the hullaboo about ‘Ease of Doing Business in India’ or the much publicised ‘Make In India’ initiative, the fact remains that the Indian business diaspora is on a continuous down slide.
With the vote bank politics throttling the governments, irrespective of the party in power, the situation has come to an extent that the fine balance which ensured fair business practices, fair taxation and the concept of an ‘ongoing concern’ seems all getting threatened of its very existence.
It’s a hard fact but as it stands, those of us, even remotely connected with business, will appreciate what Union Minister Nitin Gadkari said yesterday.
Nitin Gadkari opined that it is unfair to tag a “One time loan defaulter Vijay Mallyaji” as a “Chor” (Thief), adding that the embattled businessman has a four-decade-long track record of timely debt servicing.
For 40 years Mallya was regularly paying interest on loans. After entering the aviation sector, he started facing problems, and suddenly he became a thief? If a person repays the interest for 50 years, and if he defaults once, then suddenly everything is fraud? This mindset is not correct, Gadkari said at an economic summit organised by the Times Group.
Gadkari said the loan he was referring to was from the Maharashtra government-owned entity Sicom to Mallya, extended 40 years ago, which he repaid on time without any default.
Stating that ups and downs are part and parcel of any business, the road transport minister said if someone goes through a downward cycle, then he or she has to be supported.
“There are risks in the business, be it banking or insurance, there are ups and downs. But, if the mistakes are bona fide, because of global or internal factors in the economy like a recession, then that person who is facing difficulties must be given support,” the minister said.
Likening an election loss to a business failure, he recalled how he lost an election when he was all of 26, but underlined that the loss did not mean that his political career ended.
“If Nirav Modi or Vijay Mallyaji has committed (financial) fraud then send them to jail, but whoever comes in distress, and if we label them as fraudster then our economy will not progress,” he said.
Earlier this week, a London court had ordered Mallya’s extradition, in a major boost to the government’s efforts to bring back the fugitive businessman.
Ahead of the extradition hearing, the 62-year-old former boss of the now-defunct Kingfisher Airlines offered to repay the entire principal amount to banks.
Gadkari has for long been calling for a more considerate and realistic approach to NPAs, and indirectly blamed the bankers for the NPA mess, saying our banking system is such that it does not support sick companies.
“When someone is serious then we put him/her in an ICU, but our banking system first puts a sick company in the ICU and then ensures that it dies,” he quipped.
Last month, Gadkari had blamed the RBI for “complicating” project finance, saying over 150 projects involving over Rs 2 trillion investments are struggling to get financial closure.”Unfortunately, many times, the circulars issued by the RBI are creating more complications and this is one of the reasons why I am facing problems as far as financial closure is concerned,” Gadkari had said.
While, am sure, the media in its blind eagerness to earn TRP’s and in a charged political environment will skin the frank admissions made by Nitin Gadkari, but the fact remains that there is something that seriously ails our industrial and business environment, more so the policies governing it.
This something that stands exposed today, needs to be nailed now before some in governance, with their limited exposure to ground realities of doing business, press ahead with the likes of Feb 12 RBI circular, mandating all business defaulters to go into bankruptcy proceedings.
This is akin to a situation, for the sake of mere understanding, wherein the Vaishyas in the Mauryan era, are suddenly wiped out, in one stroke, leaving only the three Varnas i.e. Brahmins, Kshatriyas and Shudras to continue running a society. Unimaginable!!
It’s high time that the Government starts ‘calling a spade a spade’, assess the practicalities of business, gauge the Indian environment in which businesses operate, review the various factors (including the fringe) and policies that impact them.
A high level committee comprising strictly of more number of diverse business representatives (both big and small), elements of judiciary along with reps from civil services should be established to review and recommend overcoming the shortfalls that have led to the culling of businesses and thus arrest their imminent downfall. This shall go a long way in pulling up the nation from the Economic downward spiral that it has been hurtling into for some time now.
There are prizes worth $50,000 in cash and non-cash rewards for winners of the “AI 4 All Global Hackathon” launched by Indian government think tank, NITI Aayog.
For this Artificial Intelligence hackathon, NITI Aayog has tied up with a Singapore-based AI startup, Perlin, for conducting the hackathon.
NITI Aayog has invited developers, students, startups, and companies to participate in the hackathon. The initiative is aligned with the government’s future plans of nurturing the AI ecosystem in the country. NITI Aayog believes that AI applications can have significant impact on social and economic development of India.
AI 4 All Global Hackathon
The primary objective behind the hackathon is to create innovative solutions in distributed computing and privacy preserving techniques like multi-party computation. The government think-tank wants to promote awareness and develop solutions that deliver the twin benefits of efficient computing. The expected products from the hackathon will aim to address the infrastructure challenges while not compromising on data privacy while creating AI algorithms.
According to Amitabh Kant, the CEO of NITI Aayog, India is ideally positioned as the thought-leader, its regional economic power will help in bringing the benefits of innovation in AI to communities around the world. The government think-tank has been conducting similar hackathons all over the world.
The hackathon will be organized in two stages. The first stage will end on January 15, 2019. Stage two will only include shortlisted participants, which will conclude on March 15, 2019. The jury members include global industry leaders and policymakers.
The winners will share a prize pool worth of $50,000 in cash and non-cash rewards. The first three winners will also get cloud credits from Perlin.
Why Hackathons can boost innovation
Hackathons are often used by businesses to address a wide range of challenges which cannot be solved through conventional mediums. One such major challenge that hackathons address is finding talent in emerging IT skills like artificial intelligence and data science.
After its sting operation rattled the nation last year and brought to light how big media houses led by stalwarts like Times of India etc were ready to peddle Hindutva propaganda as “news”, Cobrapost is back with what they’re calling “India’s biggest financial scam”. The press conference today announcing the sting had a panel that included Cobrapost editor Aniruddha Bahal, BJP leader Yashwant Sinha, lawyer Prashant Bhushan, IT professional and former AAP member Neil Terrence, journalists Paranjoy Guha Thakurta, and Prem Shankar Jha.
According to the Cobrapost story published on January 29, 2019, the primary promoters of a Non-Banking Financial Company (NBFC) called Dewan Housing Financial Limited (DHFL) siphoned more than ₹31,000 crore of public money. The story alleges that the scam was mainly pulled off through grants of loans and advances to shell companies. The same money was then re-routed via these dubious companies and parked outside India so as to acquire assets.
The organisation said: “Cobrapost has unearthed the scam by closely analyzing documents available with public authorities and information available in public domain.”
But how does one flawlessly carry out a scam of such an astronomical amount without being apprehended by the authorities? According to Cobrapost, the scam was pulled off mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell/pass-through companies—all of which related to DHFL’s primary stakeholders: Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan. The story alleges that the Wadhawans, through their proxies and associates, had, in turn, passed the money on to companies controlled by them. Cobrapost alleges that this money was used to buy shares/equity and other private assets in India and in other countries like the UK, Dubai, Sri Lanka and Mauritius.
According to the story, what helped Kapil and Dheeraj Wadhawan pull off the scam is the position of power and influence they’ve held since they occupied positions as majority members in the Finance Committee of DHFL—“which approves loans of ₹200 crore and above to any entity”. The story alleges that the Wadhwans ensured “loans were granted to shell/pass-through entities and the money ultimately ended up in the companies owned or controlled by the Wadhawans”.
Though people have often contradicted the false claims, DHFL has used Shahrukh Khan’s brand image to wipe off many of its wrong doings in public domain
The story alleges that DHFL and its primary promoters created dozens of shell companies with a nominal capital of ₹1 lakh, and divided them into smaller groups of 2-4 companies. A lot of these companies have the same or similar addresses and the same set of initial directors, as well as the same group of auditors to cover up the financial details of these companies. It has been alleged that DHFL’s primary promoters disbursed huge loans to these groups of shell companies—mostly without any kind of collateral— the proceeds from which “appear to have been used for creation of private assets both offshore and in India”. The story claims that DHFL’s primary promoters disbursed thousands of crores worth of loans to these shell companies in the name of secured loans against slum development projects, without any due diligence or maintaining an equity ratio.
Apart from these irregularities, the story further alleges that these loans were disbursed in a single tranche rather than following the established norm of carrying out this process in stages against the progress of the project works. Cobrapost also observed in its story that the Wadhawans bought a Sri Lankan Premier League cricket team by using loan money dubiously advanced by DHFL.
To give readers a mental image of the scale of the fraud, DHFL’s net worth according to its audited financials for 2017-18 is ₹8,795 crore. However, the company has taken loans from banks (both Indian and foreign) as well as financial institutions to the tune of ₹96,880 crore. This includes Convertible Debentures (NCD) worth ₹31,312 crore, loans from banks worth ₹36,963 crore, External Commercial Borrowings (ECB) worth ₹2,965 crore, loans from National Housing Board (NHB) worth ₹2,848 crore, Public Deposits worth ₹9,225 crore and other loans amounting to a total of ₹13,567 crore.
What is notable is that according to a copy of DHFL’s annual report, the company has secured loans from at least 36 banks in total—32 nationalised and private banks and six foreign banks. Of the 32 nationalised banks, State Bank of India had sanctioned the highest amount of loan to DHFL as on April 6, 2018, amounting to nearly ₹12,000 crore, followed by Bank of Baroda (₹4,396 crore), Bank of India (₹4,150 crore) and Canara Bank (₹3,100 crore). When it came to foreign banks, these included CTBC Bank Co Ltd, which had loaned DHFL a whopping $10,0000,00, Taiwan Business ($5,000,000), and Barclays Bank PLC ($30,000,000). This data was filed by DHFL on the MCA website.
The Cobrapost investigation further alleged that substantial amounts have been lent by DHFL to shell companies, created simply to ship money out of DHFL and channelise it elsewhere—mostly in companies where Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan have personal interests. “The list of violations, as already mentioned, is so varied and so outrageous that it puts any other scam of the same nature to shame. Compared to the DHFL, the Saradha and the Neerav Modi/PNB scam look like the work of amateurs.”
The most important question that arises is: where has all this money gone? According to the Cobrapost investigation, this long-term scam involves secured and unsecured loans to dubious entities and shell companies, illegal insider trading, creation of offshore assets and tax evasion, so as to “leak public money in large corpuses to be finally converted into private wealth of the chief beneficiaries of the scheme: the Wadhawan Group”.
According to the story, 34 shell companies—within the interest of Wadhawan Group and the chief promoters of DHFL— have been given unsecured loans amounting to ₹10,493 crore. Another 11 companies belonging to the Shahana Group have been given ₹3,789 crore. It is these shell corporations that are using loans in order to aid the Wadhawan Group and Shahana Group to convert public funds into private money. Most of the 34 mentioned shell companies have no business or income. Strangely enough, they are also, in most cases, audited by accounting agencies such as Thar and Co, who help conceal these fraudulent transactions.
It is interesting to note that out of the out of the total 45 companies mentioned above, six companies use the same official email address inform2co@gmail.com. Four companies use inform2ca@gmail.com. Three use inform12com@gmail.com. Ten others use sayalihs2102@gmail.com
The shells are merely corporate vehicles used to siphon funds from DHFL.
More importantly, nearly 35 shell companies have not filed any charge documents for loans on the MCA website which is a mandatory compliance. Most of the companies have endeavoured to hide the name of the lender company-DHFL.
According to the story, DHFL themselves hid the terms of the loan and terms of repayment in their financial statement. More importantly, all the shell companies have zero or very negligible income from business operations since their inception. Besides, more than a dozen companies have not filed balance sheets for FY 2017-18 in the ROC as of January 26, 2019.
According to the story: “Not only does the scam point fingers squarely at the inefficient corporate governance of NBFCs, it also asks serious questions about the amount of negligence or perhaps connivance and complicity of public bodies. It is clearly a case of complete connivance amongst public and private figures to misuse and illegally siphon off public money.”
An interesting part of the alleged scam uncovered by Cobrapost is that donations worth ₹19.5 crore had been given to the ruling BJP between 2014-15 and 2016-17 by three developers—all of whom are allegedly linked to the Wadhawans. These developers are RKW Developers Pvt. Ltd., Skill Realtors and Darshan Developers. These three companies are the ones whose names had come up several times during the Cobrapost investigation “as they are all promoted by the Wadhawans, Kapil and Dheeraj”.
Out of the three companies playing the role of alleged benefactor to the BJP, RKW and Darshan top the list when it comes to shelling out huge sums of money in the form of political charity. RKW allegedly donated ₹10 crore in 2014-15 while Darshan donated ₹7.5 crore in 2016-17. Skill Realtors allegedly donated ₹2 crore in 2014-15, but like RKW, it too showed no donation in its balance sheets for 2014-15. While receiving and reporting these donations, the ruling BJP also failed to provide PAN details of these particular donor companies. The Cobrapost story said: “These charities, however, flout the provisions of Section 182 of the Companies Act 2013, which govern corporate funding to political parties.”
What is even more interesting to note is that although RKW posted a loss of ₹8284772 in 2012-13, it had the resources to contribute ₹10 crore to BJP coffers in 2014-15. Skill Realtors did not mention their ₹2 crore donation in their balance sheets and failed to file a profit and loss account with the ROC, the story alleged. “Curiously, the Mumbai-based construction company made this huge donation out of a measly profit of ₹26,914.”
Finally, Darshan Developers, who donated ₹7.5 crore to the BJP in 2016-17, incurred losses of ₹5,13,406 in 2013-14. They are therefore completely ineligible to make donations to any party in such large sums, as the amount far exceeds the 7.5 per cent of its profits as stipulated by law. As per the Act, every officer in the company who is in default is punishable by law with six months’ imprisonment and may be fined up to five times the amount of the donation.
However, the bigger question that arises is: how did they do it? According to the story, DHFL’s modus operandi is to loan out large sums of money under various project heads to companies of no standing. The exact scheme of transactions has been replicated multiple times while giving out loans to six sets of shell companies. Furthermore, all the companies have common initial directors—Aparna, Sachin Bhatuse and Santosh Krishna Acharya—as well as shareholders who do not have any financial background. According to the Cobrapost investigation, “no NBFC could have given loans to such entities without any background check or due diligence”.
The story also alleges that DHFL had sanctioned and disbursed loans to companies in Gujarat and Karnataka close to their respective state elections. In Gujarat, DHFL had allegedly sanctioned and disbursed a total of ₹1,160 crore to various Gujarat-based companies under multiple schemes and projects. All the said projects are currently and have been on hold from the municipal corporation, and most projects bear the status of having been suspended—which in itself makes all the sanctioned loans bad loans. The loans have been sanctioned against no debt equity and the companies involved have filed no annual returns.
The story observes: “Interestingly, the entire sum of the loans has been disbursed very close to the time of the Gujarat elections, which is a coincidence one cannot entirely ignore.”
In one of its last blows, Cobrapost alleged that DHFL had indirectly funded the Wadhawan Cricket Lanka (Private) Limited, a cricket team owned by the Wadhawan Group through the one furnished by RKW Developers—whose primary source of income is the huge number of shares bought at a phenomenally high premium by all the shell companies which were given loans by DHFL.
DHFL responds
Here is DHFL’s statement in full:
DHFL is a publicly listed Housing Finance Company and is regulated by the National Housing Bank and the Securities and Exchange Board of India, amongst other regulators. This mischievous misadventure by CobraPost appears to have been done with a mala fide intent to cause damage to the goodwill and reputation of DHFL and resulting in erosion in shareholder value.
DHFL today received an email at 8.44 a.m. in the morning, with a follow-up reminder one hour later, seeking answers to 64 questions from Cobra Post, many of which were laced with political innuendos. We are shocked and surprised to receive this inquiry this morning, although Cobra Post had announced its press conference last Friday, i.e. 25 January 2019, to disclose an alleged financial scam. One would have expected as a responsible media house CobraPost would have asked these questions during their investigations and not on the day of the press conference.
Their entire approach raises serious concerns about the motivation of this so-called expose. It is necessary in public interest that if they believed in the genuineness of their issues to have given DHFL an opportunity to explain the facts that are in any case available in the public domain.
DHFL is one of the leading and most respected housing finance companies in India with over ₹1,11,000 crores of assets under management and a large customer based across the country. Despite the recent liquidity regime, DHFL as a responsible corporate has met all its obligations to the lenders and has paid back to them in excess of ₹17,000 crores in the last three months. DHFL has a strong corporate governance regime and has received AAA credit rating from leading credit agencies. The company is fully tax compliant and its books are audited by global auditors.
We understand, for the last several weeks, an anonymous note has been making the rounds with similar defamatory and scurrilous allegations. The real intent of this exercise appears to be to destabilize the company and the market equilibrium besides hampering our meeting the on-going obligations. We are also concerned about the timing and the holding of the press conference before the stock market close and days before the interim budget.
DHFL is a responsible and law-abiding corporate citizen and all loans are disbursed in the normal course of business in accordance with industry best practices and in compliance with all regulatory norms. The company’s financial statements are submitted to the Stock Exchanges and are in the public domain.
DHFL and its group companies are confident of meeting any scrutiny on any aspect of our operations and will pursue these frivolous allegations to its logical conclusion.
Cobrapost reached out to the Wadhwans for their side of the story but they have not responded to any of the specific questions, according to Aniruddha Bahal.
Revenue shortfall for April-December, 2018 stands at an immoderate Rs 4,77,000 crores as against the target of Rs.13,48,048 Crores. This is likely to have a significant impact on the fiscal deficit especially because the central government has withstood higher revenue shortfalls than States.
GST rate reductions last year has already cost the country Rs.80,000 crores. Despite this, somewhere in Oct 2018, the race to the bottom began with extensive tax rate cuts in each of the GST council meetings. The recent announcements by the Prime Minister and the Finance Minister of further reducing rates of even the luxury items will only add a further burden on the people of India.
This raises two questions, on the efficacy of the process of decision making as well as the timing of the decision. Are decisions being made on the recommendations of the fitment committee after studying their impact? If so, are they flawed or is it a strategic decision for shoring the fledging revenue decline? Can the country afford such largesse or is it downright political irresponsibility wilting under the pressure of performance in the upcoming lok sabha elections, a few months away?
Rate fixing is done by the fitment committee undertaking an econometric exercise to study the impact of each proposal on how it compares to the RNR, its revenue impact and whether it creates a negative input tax credit situation etc. The cherry picking being done since the Oct 29th GST Council Meeting in dropping GST tax rates gives an impression that it does not have the concurrence of Fitment Committee or at least, has been done without proper studies.
Adhocism not only sets a wrong precedence but undermines the processes instituted to protect against such decision making. It must be said that GST is as much a political issue as an economic one. So, some decisions could justifiably invoke a political sanctions but cannot be done on a mass scale.
Moreover, there do not appear to be political pressures or compulsions for reducing luxury items like dish washer, air conditioners. So, timing makes it obvious that political appeasement has taken precedence over financial prudence.
Dire Financial Crisis:
All indications point to India facing a dire financial crisis. The Government’s unprecedented step of dipping into RBI pockets confirms this. Moreover, the country has been able to collect revenues of not more than an average of Rs. 88,000 Crores per month for the last 17 months as against a target of Rs. 1,20,000 crores per month. In addition, the country has lost significant revenue during transition to GST due to its poor implementation and the impact of demonetization.
Globally, most countries attempt to protect at least the current revenue streams of Governments (RNR) before their transition to GST. In India, it is estimated that the Service Tax revenue would have increased from Rs 2,80,000 Cr to Rs 3,00,000 Crores p.a. in the conventional tax in the absence of GST. What is worrisome is that most of the collections have fallen short of the desired RNR. Central Government needs revenues to compensate the states that cannot achieve the targeted revenue growth. Given such liabilities, the race to the bottom will only have severe adverse impact on the country.
Identifying Delinquencies
It is likely that the next GST council meeting is contemplating reduction of cement rates from 28% to 18%. This well-intended initiative of decreasing the cement GST rates is based on the assumption that it will create jobs by giving a fillip to the construction industry. Construction industry employs five times more people than the combined employment in the next four or five sectors. Therefore, it makes good rationale sense to stimulate the real estate industry.
The problem however is that there is a huge stock of building assets available in the market. There are no buyers in the market. Without liquidation of existing stocks, no builder will undertake construction. Moreover, Land accounts for a major share of the real estate costs making Indian real estate one of the highest priced in the world. Unless these fundamentals are corrected, what is the efficacy of reducing cement GST taxes?
The crux of the problem is that, barely 60% of the GST taxpayers are filing returns.Of the 1.2 crore GST taxpayers, the top 5000 account for roughly 90% of the revenues. Delinquency has increased. Why? The odds are in favour of the dishonest businessmen.
Evasion of tax and corruption are sides of the same coin. In an effort to correct excesses of “License Raj”, the design of the GST has envisaged not investigating more than 5% of the cases, ensured that no arrests can be made and even if caught, penalties are not punitive enough to instill fear in the businesses. In reality there have been as much or more excesses by errant taxpayers. So, the odds are in favour of the defaulter as the probability of getting caught are very low.
The Remedy And Suggestions
So, what should be done to correct this situation? There is a paradigm shift required in focusing on the few who account for 90% of the government revenues and 85% of tax liability is discharged by debiting Input tax credit. It is clear that 95% of the small businesses with less than 5 crore turnover account for less than 10% of the government revenues. As it is,Government is struggling to get enough CAs, officers etc. for audits. Even a 10% compliance increase in this segment can yield substantial revenues
The way forward is to focus on decreasing compliance costs and not to focus on tax reductions. Also, GST is complex and needs to be simplified. This can be done by plugging the fountainhead tax avoidance by providing incentives to the end consumer for demanding bills.
Japan recently introduced a scheme to provide points (which can be used as fares for bus and other such activities) to its citizens for discarding their plastics into dispenser machines.
Likewise, Indian consumers who provide Pan cards for billing can be automatically credited points that can be used to offset their IT payments, or discount on electricity bills etc. With benefits accruing to the consumer, the weak link of compliance will reduce significantly.
In short, instead of harnessing the weak compliance issues, playing to the galleries will only set off a lose-lose cycle to the detriment of the country. Good economics will always be good politics.
Disclaimer: The information, ideas or opinions appearing in this article are those of the author and do not necessarily reflect the views of N4M Media.
Berlin: German holiday airline Germania collapsed on Tuesday after it failed to secure financing to meet a short-term cash squeeze and said it would cancel all flights immediately.
Amid an Airline Industry turmoil, Europe seems to be the worst hit. Jitters are being felt in Asia too, once again after airlines like Kingfisher, Air Deccan went down and shut operations in Oct 2012. Air Deccan incidentally was taken over by Kingfisher before the later went bust. Recent news of India’s famous Airlines Jet Airways under financial stress and delaying employee salaries by upto 2 months could be another cause to worry for the airlines industry.
The insolvency of Germania, which carried around 4 million passengers each year, follows on from the failure of Germany’s second-biggest airline, Air Berlin, in 2017, and underscores the turbulence in the European airlines industry.
Britain’s Monarch Airlines and Alitalia have also filed for insolvency in recent years.
Germania, founded in 1986, blamed rising fuel prices, a stronger dollar, delays in integrating new aircraft into its fleet as well as a high number of maintenance services for the cash shortage.
“Unfortunately, we were ultimately unable to bring our financing efforts to cover a short-term liquidity need to a positive conclusion,” Chief Executive Karsten Balke said in a statement.
Germania has filed for insolvency. Flight operations are terminated. Further information: https://t.co/gWgJh3szr1
Germania’s 37 aircraft mainly flew German sun-seekers to more than 60 destinations in Europe, North Africa and the Middle East. It said all flights had been halted overnight after it filed for bankruptcy late on Monday.
CEO Apology
A spokesman for the airline’s administrators said it was unclear whether operations could resume and whether the company could continue.
CEO Balke thanked Germania’s staff and apologized to passengers who had booked directly and would not be entitled to alternative flights. A Germania spokesman declined to comment on the number of passengers or staff affected.
“I have no idea whether we are going to be put on another flight or whether we can book our own new flight through another carrier. No idea,” passenger Iris Fenske told Reuters TV at Duesseldorf airport.
The Federal Association of the German Aviation Industry said other airlines, including Condor, Tui Group’s TUIfly and those belonging to the Lufthansa Group, would offer stranded Germania passengers special rates to return to Germany.
Tour operators will organize alternative travel arrangements for holidaymakers who have booked package deals, the German Travel Association (DRV) said.
Germany’s Economy Minister Peter Altmaier, a conservative, said he had no specific plans to offer help to Germania, adding the government would watch the situation closely.
Europe’s largest budget airline Ryanair, which posted its first quarterly loss since 2014 on Monday, said it expected further consolidation in the industry over the next 12-18 months due to overcapacity.
It predicted a further rise in oil prices would put the squeeze on smaller airlines that can’t afford to increase their oil price hedging.
Germania’s own financial problems emerged at the start of January when it said it was examining several financing options to secure its short-term liquidity needs.
It said on January 19 it had received a commitment for €15 million ($17 million, Dh63 million) in funding that would secure its medium and long-term future, but at the end of last week it confirmed media reports that it had delayed paying wages.
Air Berlin, which served around 30 million passengers a year filed for insolvency in 2017 and ceased operations. Many of its aircraft were absorbed by bigger rival Lufthansa.
