Now, book online for your railway food
ANUSHA SONI
New Delhi, 14 October
Each time Ajita Singh, aspiring to become a chartered accountant,
travels from Delhi to her home town, Lucknow, she prefers to munch
chips and biscuits rather than buy food on the train, being sceptical
about the quality.
This time, though, she tried something different — placed an order
online and the food was delivered to her, at her berth, for less than
₹ 150.
The ₹ 4,000- crore railway catering sector, a subject of debate on the
quality of food served, is witnessing a change. Responding to the need
are a couple of websites that have come up with a ' market place model
for railway catering'.
Travelkhana. com and Merafoodchoice. com are among the leading players
in this space.
Both have a tie- up with over 200 restaurants spread across 100
cities, where they can serve meals for individuals or groups. The cost
could vary starting at around ₹ 130. All one has to do is provide the
PNR number on the ticket or the originating and destination station,
along with the date of travel. The websites will let you choose from
multiple cuisines and prices. The delivery boy will have to buy a
platform ticket to give you the food. Both these companies started
with an investment of under ₹ 1 crore and expect venture capitalist
funding in the coming months. "We are in a very advanced level of
talks with the Railway Board for making us a recognised partner in
rail catering," says Pushpinder Singh who started travelkhana. com in
August 2012. He plans to soon start a mobile application.
"We serve about 500 meals in a day and reach 158 cities. People want
quality food and affordable prices", says Piyush Kasliwal, a software
professional who started merafoodchoice.com in November 2012. The
websites usually get a cut of 15- 30 per cent in the profits of the
restaurant.
Pushpinder expects large fast- food chains to tie- up with him soon.
Currently, under the standard prices decided by the Railway Board, the
caterers must serve a vegetarian meal at amaximum of ₹ 50 and a
nonvegetarian at 55. But, usually, charges go up to ₹ 85 and above,
according to railway officials. "Most of them overcharge as they say
that in the current inflation, it's very difficult to provide food at
the rates decided by the railways," says an official. In 2010, the
catering of Indian Railways was taken away from Indian Railway
Catering and Tourism Corporation. Currently, a little over 30,000
catering units take care of food in the trains and at stations.
Dinesh Trivedi, who was railway minister in early 2012, had announced
he'd start asimilar ' book a meal policy', where people could book a
meal of their choice before boarding.
There have been success stories earlier, too. For instance, Comesum, a
vendor for IRCTC, has about 20 outlets at railway stations and serves
70- 80 trains but its reach is limited. It's here that the online
model can perhaps fill the gaps.
The railway catering sector has been a subject of debate on the
quality of food served
Mumbai Police wing seeks powers to attach properties of Shah, others
SANJAY JOG
Mumbai, 14 October
The Economic Offences Wing (EOW) of the city police has sought
recommendations of the Mumbai and Mumbai Suburban district collectors
for invocation of the provisions under the Maharashtra Protection of
Interest of Depositors Act, 1999, ( in financial establishment).
The invocation, if it happens, will give EOW the powers to attach the
properties of NSEL promoter Jignesh Shah, besides former directors, in
connection with the ₹ 5,600crore payment fraud at the bourse.
Balsing Rajput, deputy commissioner of police in the EOW, told
Business Standard: " We expect the two district collectors'
recommendations within a day or two. We have sought invocation of the
Maharashtra Act, which mainly covers the functioning of financial
establishments.
The invocation of its provisions will enable EOW to attach properties
of Shah and others who could have gained out of the crime." On
conviction for fraudulent default, according to the Act, imprisonment
for up to six years and a fine of up to ₹ 1 lakh can be imposed on
promoters, partners, directors or employees of a financial
establishment.
The Act gives the state the powers to attach properties of firms that
fail to return deposits after maturity or on demand from depositors.
Properties can also be attached if a financial establishment does not
pay interest or other assured benefits, fails to provide the service
promised against such deposit, or where the government has reasons to
believe it is acting in a calculated manner against the interest of
depositors with an intention to defraud them.
Pending order from the designated court, the government can conduct
the attachment through appointment of a competent authority.
EOW's action has come within days of the arrests of former NSEL vice-
presidents Jai Bahukhandi and Amit Mukherjee over alleged fraud and
bribery. These arrests were made on the basis of an FIR lodged against
them, NSEL promoters, the board and other key employees.
Meanwhile, EOW on Monday recorded the statements of former NSEL
director B D Pawar and a director of Delhi- registered Namdhari Food
International and Harayanabased Namdhari Rice and General Mills were
also recorded.
Asks for invocation of the Maharashtra Protection of Interest of
Depositors Act, 1999
NSEL PAYMENT FRAUD
FINANCE 7 >
>Returns thatweren't cost NSEl ~ 1,700 cr
THE SMART INVESTOR 14 >
>Compass: Petchem saves the day for RIL GK Pillai nominated on MCX- SX board
MCX- SX, part of Financial Technologies group, on Monday said former
home secretary, Gopal Krishna Pillai, had been nominated public
interest director on its board. No question of govt taking over NSEL:
FM
Finance Minister P Chidambaram has said NSEL's parent group, Financial
Technologies, and related entity, MCX- SX, are underwatch and people
responsible for the alleged irregularities will have to pay the price.
" There's no question of the government taking over NSEL," he said.
To unlock FDI, govt to ease lock- in period for realty
NAYANIMA BASU
New Delhi, 14 October
Much to the cheer of foreign real estate developers, those investing
in India's construction sector might be allowed to exit before the
mandatory three years stipulated at present.
However, for that, they would have to complete the project and procure
completion occupancy certificates from local authorities.
Currently, they can exit before three years of putting in money only
with permission from the Foreign Promotion and Investment Board (
FIPB).
That's not all. According to a Cabinet note, being prepared by the
Department of Industrial Policy and Promotion ( DIPP), foreign
developers will be allowed to take back the entire invested amount
before three years, after obtaining the government's approval.
A senior official involved in the process confirmed
this to Business Standard.
According to the current FDI policy, the lock- in period of three
years applies to every tranche of investment brought in by aforeign
player from the date of receipt of investment or from the date of '
completion' of minimum capitalisation, whichever is later. Developers
had long been complaining that restrictions, such as the lockin norms,
deterred them from investing in the Indian market. At present, at
least $ 10 million of paid- up capital is required in whollyowned
subsidiaries and $ 5 million in joint ventures.
"There will be general easing of conditions in the lock- in norms. If
they ( foreign developers) want to exit, they should not be scared to
come to us for an approval," the official said.
DIPP, which has received approvals from most departments, is now in
the process of firming up its proposal. It is expected to shortly
finalise the final Cabinet note.
With investors proposed to be allowed to exit earlier on receipt of
completion occupancy certificate, there would be an incentive for
players to complete the projects.
India allows 100 per cent FDI through the automatic route in
townships, housing, built- up infrastructure and construction-
development projects, subject to certain conditions.
Between 2000 and 2013, the construction development sector has
received about $ 22 billion of FDI — about 11 per cent of the
country's total FDI inflow during the period.
However, since 2012, FDI in the sector has slowed down significantly.
In 201213, it was down to $ 1.33 billion, against $ 3.14 billion the
previous year. In the first four months of the current financial year,
only $ 0.36 billion foreign direct investment has flowed into this
sector.
But completion occupancy certificates to be mandatory BUILDING BRIDGES
FDI inflows in the construction sector
2011- 12
$3.14 bn
2012- 13
$1.33 bn
2013- 14*
$0.36 bn
*April- July Source: Department of Industrial Policy &Promotion
Returns thatweren't cost NSEL ₹ 1,700 cr
NSUNDARESHA SUBRAMANIAN
New Delhi, 14 October
Aforensic audit commissioned by the Forward Markets Commission (FMC)
has found National Spot Exchange Ltd ( NSEL) gave away ₹ 1,700 crore
as returns during its life span. According to regulatory officials,
this sum, around 30 per cent of the ₹ 5,600 crore the exchange owes to
13,000 investors, was paid using the money brought in by new
investors, as trades on the platform did not generate actual returns.
"An unpermitted financing scheme was being run on the NSEL platform,
wherein NSEL was allowing the defaulting buyers to get more money and
fresh money was being brought in to ensure the earlier members were
not exposed," said a senior regulatory official.
While some borrowers are prepared to pay the original amount they
borrowed, they are not prepared to pay the extra amount the exchange
has added to their dues as " rollover costs", leading to disputes.
In negotiations with the aggrieved investors over the past few weeks,
the exchange's promoters, led by Jignesh Shah, have asked them to take
ahair- cut. But investors have not agreed to this which has caused a
deadlock.
Now, the settlement of investors' dues could not be completed, unless
there was a decision on who would foot this ₹ 1,700- crore bill, the
officials said.
Asked by Business
Standard if NSEL had taken any decision on how to generate this sum, a
spokesperson of the exchange indicated NSEL was not responsible for
the repayment. " This is not correct. When an old investor exited, he
exited with returns. His returns were funded by new investors, instead
of defaulters. This way, the old investor got the returns; it's not
NSEL that got the money. In a way, old investors enjoyed the financing
platform. Now, it is part of the defaulting members' dues," the
spokesperson said in an emailed response.
The sum grew over the years as NSEL went on filling in payout defaults
by one party by using cash generated by others. The liability of
members who had already defaulted also went on increasing. In his
affidavit confessing his role in the scam, Anjani Sinha, former MD &
CEO of NSEL, estimates " rolling over costs" to be ₹ 1,200 crore. He
also gives a member- wise break up of these costs.
According to Sinha, " It is a fact that these buyers have used part of
these funds towards repayment of their interest component and other
exchange charges. Besides, members have also used this fund for giving
it back to the exchange as cash- margin deposit. Considering all these
factors, the cost of funds comes to 21- 22 per cent a year. So, the
total amount payable by the members as on date includes the principal
amount utilised by them, plus the cost of funds paid by them through
rolling over of their liability by way of compounding." He goes on to
add: " The situation was such that if we did not allow rollovers,
buyers would have defaulted on huge amounts. On the other hand, if we
continue to allow a member to roll over his position position, his
exposure keeps on increasing every year by 2025 per cent due to the
impact of rollover cost and exchange fees."
Exchange used new investors' money to pay returns to old ones, finds
FMC's forensic audit
How it unfolded
|Exchange paid regular returns to investors |Returns were paid despite
defaults by borrowers |The payments were made using money brought in
by new investors |The return payments added as rolling- over costs to
borrowers' dues |These rolling- over costs run into hundreds of crores
of rupees
NKProteins ₹ 388 crore
PD Agro Processors
₹ 215 crore
ARKImports
₹ 165 crore
LOILgroup ( 3 firms)
₹ 117 crore
Mohan India/ Tavishi
₹ 70 crore
Yathuri
₹ 55 crore
Top rolling- over cost of funds
Source: Anjani Sinha's affidavit
Madras HC bars ARCIL from taking possession of SPIC land
BS REPORTER
Chennai, 14 October
The Madras high court has set aside earlier orders allowing Asset
Reconstruction Company ( India) Ltd ( ARCIL) to take possession and
sell the 168.35 acres in Tamil Nadu it had acquired as part of the
restructuring of SPIC Petrochemicals Ltd, a subsidiary of Southern
Petrochemical Industries Corporation ( SPIC).
The order was related to a petition by Chennai Petroleum Corporation
Ltd ( CPCL), which had formed a joint venture with SPIC to float a
project on 1,655.92 acres, including the disputed land. Judge V
Ramasubramanian said the issue involved public interest, as despite
the acquisition of more than 1,655 acres by the government, invoking
the emergency clause, the industry for which the acquisition was made
hadn't come up. Allowing CPCL's application, the court recalled the
earlier order passed in December 20, 2010, which allowed ARCIL to take
possession of the 168.35 acres.
In January 1985, CPCL had signed a memorandum of understanding with
SPIC for a joint venture to float a public limited company— National
Aromatics and Petrochemicals Corporation— after the former received an
industrial licence to manufacture o- xylene, benzene and purified
teraphthalic acid. The project was named Arochem.
In September 1989, the Tamil Nadu government accorded administration
sanction for the acquisition of 1,655.92 acres of patta and poramboke
lands in various villages.
NSEL probe gets wider
RAJESH BHAYANI
Mumbai, 14 October
The probe in the National Spot Exchange Ltd ( NSEL) payment crisis is
being widened, with more agencies joining the investigations. Also,
the Forward Markets Commission ( FMC) is considering aspecial audit of
the Multi Commodity Exchange (MCX), NSEL's sister concern.
The Department of Company Affairs has already begun an inspection of
NSEL under Section 209- A of the Companies Act, 1956. The probe would
include inspection of the exchange's books, with a specific reference
to " all sums of money received and expended by the company and the
matters in respect of which the receipt and expenditure take place".
The Enforcement Directorate is probing the exchange's operations under
the Prevention of Money Laundering Act ( PMLA), after securing
information in this regard from the economic offences wing of the
Mumbai Police.
When contacted, an NSEL spokesperson said, " Since investigations are
on, we cannot comment on this." After issuing a show- cause notice to
the promoters and directors of the crisis- ridden exchange, the FMC is
now focusing on MCX, India's leading commodity futures exchange. It is
considering a special audit of MCX operations since the inception of
the exchange in 2003, focusing on related party transactions and on
probing whether any special treatments were given to these, in terms
of margins.
In response to a query, an MCX spokesperson said, " MCX has not yet
received any communication from FMC with regard to a special audit.
MCX is open to any scrutiny from FMC or any other authority." MCX has
already admitted the Indian Bullion Merchants' Association ( IBMA) was
found to be trading on MCX, despite the fact that it was a subsidiary
of NSEL and, therefore, a related party. Trading by related parties
isn't allowed by regulations governing commodity futures.
The MCX spokesperson clarified, "MCX has an automated trading system,
with virtually no human interference. Calls for margin money are
automated, with adequate provisions for informing members about their
margin requirements and settlement dues. Moreover, the system does not
waive or lower margin money for members' leveraged trades. Members are
not allowed to take new positions without the requisite margin
requirements, and the system automatically squares off all such
outstanding positions." Sources privy to the development said a
special audit would cover issues related to trading by IBMA — whether
any related party traded on it or not, whether favourable margins were
given to related parties and whether proper procedures were followed
in case of NSEL defaults.
In its show- cause notice to NSEL promoters, FMC had said there were
2,000 defaults.
A source said FMC would soon finalise who would conduct the special
audit. The audit is aimed at ascertaining whether corporate governance
norms were adhered to. " If nothing serious comes out, that will
inspire confidence among other stakeholders and if some discrepancies
are found, prompt action will be taken to restore the confidence,"
said a government official.
Inspection under Companies Act launched; ED starts money- laundering
probe; FMC mulls special audit of MCX
--
CS A Rengarajan
9381011200
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