A Russian with history of duping several gullible people in Russia and the US is spreading his “mutual mutual aid fund” idea called, MMM India. This is nothing but a pure money circulation scheme
Mavrodi Mondial Moneybox India or MMM India, a multi-level marketing (MLM) or a Ponzi (pure money circulation) scheme set up by Sergei Panteleevich Mavrodi, a Russian businessman and financier, is spreading its wing in India, especially in rural areas. According to Wikipedia, in 2007 Sergei Mavrodi was found guilty in a Russian court of defrauding 10,000 investors out of 110 million roubles or about $4.3 million. But more about Mavrodi and his businesses later.
MMM India, the Ponzi scheme says it is neither a company nor a business but a mutual mutual aid fund. In simple words, it takes Rs5,000 from you, gives you 100 units of some virtual currency called Mavro. When you bring two more people, you would receive 20 Mavros in your e-wallet. The new member also deposits Rs5,000 in the old member's account, thus your ‘investment’ is repaid. Virtually, because the cash is converted into Mavros in your e-wallet and then there are ‘minor’ terms and conditions, which makes it difficult to get your real money back.
The MMM scheme mandates all members to keep at least 100 Mavros in their account. That means your Rs5,000 are locked permanently in air. This is because MMM is neither a company nor a business as it operates only through the internet. This helps the double your money scheme to avoid all kind of legal permissions and regulations. MMM likes to call itself an international, free, self-adjusting community or social virus. Unfortunately, it is nothing but a money-gobbling virus.
According to Who.is data, MMMIndia.in is registered by Ivan Ivanov from Petrozavodsk, Russia and the domain would expire on 11 July 2014. Its DNS record shows that mmmIndia.in uses an ID address 18.104.22.168 located in Moscow.
MMM India is nothing but a pure money circulation scheme that works on enrolling new members. The moment there are no new members, the scheme collapses. A new member pays money (here virtual money!) to the old member and it is repeated infinite times.
Two basic questions need to be answered. One, in the end who controls the 100 Mavros, or Rs5,000 that the member needs to keep in his virtual account? And second, if the idea of virtual money or mutual mutual aid fund is so great, then why the government or Reserve Bank of India (RBI) is not implementing this? Why such a great novel (!) idea needs to be sold through chain marketing route instead of customary marketing system that has served human society for thousands of years?
In short, strictly stay away from MMMIndia and it is bound to vanish sooner than later.
Coming back to MMM's founder and ‘brain’ Sergei Mavrodi, on 22 December 1997 declared MMM as bankrupt and disappeared. He was on the run until his arrest in 2003.
While on the run, in 1998 Mavrodi created Stock Generation (SG), a classic pyramid scheme presented as a “virtual stock market game”. However, its game was over once it caught attention of the US Securities and Exchange Commission (SEC). In 2003, the SEC obtained permanent injunctions against SG. Mavrodi was then placed under police custody. He was convicted of holding a fake passport and was sentenced to 13 months in prison. On 22 May 2007, Mavrodi left prison, having served his full sentence.
On 28 April 2007, the Moscow court sentenced him to four and a half years in a penal colony (a settlement used to exile prisoners and separate them from public). The court also fined him 10,000 roubles or about $390.
In January 2011, Mavrodi launched another pyramid scheme called MMM-2011, asking investors to buy so-called Mavro currency units. He frankly described it as a pyramid, adding “It is a naked scheme, nothing more ... People interact with each other and give each other money. For no reason!” In May 2012, he froze the operation and announced there would be no more payouts.
In 2011 he launched a similar scheme in India, called MMM India, again stating clearly that the vehicle is a pyramid, says Wikipedia. Looking at the past record of Mavrodi and his money multiplier schemes, you do not need an astrologer to tell about the future of MMM India. This Ponzi from Russia only loves your hard-earned money, unless you are a super spy like the 007.
Nomura believes the most damaging provision of the US Immigration Bill for Indian IT remains the restriction on outplacement of H1 B visa holders at client locations, which hurts outsourcing in a big way
Nomura Equity Research hosted a conference call on Tuesday, with Ameet Nivsarkar (VP,
NASSCOM) to understand how the new immigration bill unveiled by the “gang of eight” US senators could potentially impact India’s IT industry. The proposed Immigration Bill aims to reform border security, employment verification, legalization of illegal immigrants and legal immigration and temporary visas.
Key negatives of the proposed Immigration bill
1. No access to visas from 2015 for employers who have high share of foreign staff: According to the Bill, in 2014 companies will be banned from obtaining further visas if more than 75% of their staff are H-1B or L-1 employees. In 2015, the ban applies to companies if more than 65% of their workforce is H-1B and L-1 workers. In 2016, the ban moves to 50%.
Most Indian IT companies have 50%-80% of their staff as H-1B or L-1 visa holders currently, according to Mr Nivsarkar.
2. Reduced ability to place employees at customer site: According to the Bill, “an H-1B-dependent employer may not place, outsource, lease, or otherwise contract for the services or placement of an H–1B non-immigrant employee”. This means that employees on H1B visas may be restricted from working at the customer sites, although they can work from global delivery centres. This would require a business model change for Indian IT companies and raise the cost on onsite staffing for projects, according to Nomura.
3. Increased visa fees: The bill proposes to significantly increase the fees for employers who are H-1B dependant compared to normal users of the program. Specifically, if the employer has 50 or more employees, and more than 30% but less than 50% of staff are H-1B or L-1 employees (who do not have a green card petition pending), the employer must pay a $5,000 fee per additional worker in either of these two statuses. Similarly, if the employer has 50 or more employees, and more than 50% are H-1B or L-1 employees (who do not have a green card petition pending), the employer must pay a $10,000 fee per additional worker in either of these two statuses.
4. Increased lead time for hiring: The bill stipulates that employers post a detailed job opening on the Department of Labour's website for at least 30 calendar days before hiring an H1B applicant to fill that position. This would increase lead times for execution and would reduce competitiveness of Indian IT compared to MNC IT, Nomura believes.
Key positives of the Bill:
1. Higher H1B cap limit: The Bill proposes to raise the cap of 65,000 H1B visas (annual) to 110,000 which could go to as high as 180,000 in future years. This is a positive as against the current cap of 65,000, there were around 125,000 visa applicants this year—this forces the Immigration authorities to resort to a lottery system to decide who will receive visas.
2. Green card reform: The Bill proposes to exempt certain categories of skilled labour from annual numerical limits on employment-based immigrants—e.g. doctoral degree holders in STEM (science, technology, engineering, and mathematics) field would be exempted. In addition, 40% of the worldwide level of employment-based visas would be allocated to a certain set of people which include holders of a master’s degree or higher in a field of science, technology, engineering or mathematics from an accredited US institution of higher education.
According to Mr Nivsarkar, the Bill has been introduced in the Senate and it will first go to a judiciary committee and post that a mark-up committee. At every stage there could be amendments. Post that it is put to vote in the Senate and has a high chance of being passed there since the ruling Democrats have a majority.
If passed in the Senate, then the Bill is sent to the House where it goes through the same process. The final compromise bill, which has amendments from both Senate and the
House, is sent back for vote one more time at the Senate and House. If passed, it will then be sent to the president who can either sign it into a law or veto it. There is a possibility for the language to be changed at every stage.
If everything goes fine, the Bill can be made a law by October 2013 at the earliest, according to Mr Nivsarkar. The Bill, however, has less chance of being passed at the House since Republicans have a majority there. As well, Mr Nivsarkar noted that the bigger concerns in the Bill are around the fate of the 11 million illegal immigrants and not temporary work visas.
According to Mr Nivsarkar, the Bill, if passed, would require a change in the way Indian IT does business currently. Indian IT will have to consider one or a combination of the following options to continue doing business normally:
1. Acquire companies based in the US and increase local staff percentage.
2. Start onsite development centres in Tier2/Tier-3 cities, where costs are lower,
3. Tweak the onsite offshore model so as to increase offshore proportions.
Mr Nivsarkar thinks the Bill creates an unfair advantage for MNC vendors against Indian IT players. This is as they would already be in compliance with the 50% local staff provision and hence will not have to do material local hiring or bear increased visa fees with which the Indian IT would have to contend.
Top five Indian IT players which secured around 29,000 H1B visas in 2012 (Cognizant Technology Solutions – 9,281, TCS – 7,469, Infosys – 5,600, Wipro –- 4,304, HCL Technologies – 2070) compared to around 6000 for MNC players (Accenture – 4,037 and IBM –1,846).
Rejection rates continue to remain high especially for L1 and B1 visa and there has been no material decline in the same, even after the US elections, says Mr Nivsarkar.
Nomura believes the most damaging provision for Indian IT remains the restriction on outplacement of H1 B visa holders at client locations, which hurts outsourcing in a big way. This would be followed by the need to comply with the 50% local staff requirement by 2016 in terms of severity. For most of tier 1 IT, it would not be a stretch to meet the 2015 target of 35% local staff in the US. The brokerage believes the visa fee increase of usd10,000 per incremental application for companies having less than 50% local staff, is a minor depressant on margins and could also be potentially passed on to clients. Overall passage of the bill in the current form would be negative for the sector and weaken competitiveness versus MNC IT players and depress margins.
Net Interest margin (NIM) of 4.5% is the highest recorded by the bank in the last three years, according a Nomura Equity Research’s Quick Note on HDFC Bank
HDFC Bank delivered another 30% PAT growth quarter (at Rs18.9 billion), in line with Nomura’s estimate and consensus at Rs19 billion and Rs18.9 billion, respectively. Profit after tax (PAT) growth was supported by a healthy 20 basis points (bps) q-o-q improvement in NIM and stable asset quality. Loans grew 22.7% y-o-y supported by strong traction in retail loans. GNPLs (gross non-performing loans) declined 4% sequentially with GNPL ratio of 0.97%. These observations were made by Nomura Equity Research in its Quick Note on the private lender’s performance.
The bank restated some line items (with no impact on the overall PAT) as explained below. The restatement (on RBI's instructions) was driven by the following: the origination cost associated with garnering retail assets which was earlier adjusted from the loan yield is now taken in the opex line and recovery from written-off loans will now flow into non-interest income as against the earlier practice of being adjusted against provisions.
Margins at the upper end of three-year range: Net Interest margin (NIM) of 4.5% is the highest recorded by the bank in the last three years. The 20 bps sequential improvement in NIM is driven by a sharp 205bps q-o-q improvement in CASA (current account saving account) ratio and increase in the loan mix towards retail loans at 56.9% compared to 53.8% in 3Q13.
Retail loans continue to drive loan growth: Robust loan growth (up 22.7% y-o-y against Nomura’s estimate of 24.8% y-o-y) was supported by strong retail loan growth (up 27.3% y-o-y), taking the retail loans’ share up by 308 bps q-o-q. Retail loans growth was supported by personal loans (up 26% y-o-y), credit cards (up 45% y-o-y) and gold loans (up 64.5% y-o-y). LAS portfolio also registered a sharp uptick in 4Q, up 13.8% q-o-q. CV loan growth was understandably sluggish, given asset quality pressure in that segment.
For FY14, the bank looks to grow 5%-6% above the system average, with retail loans growing faster than corporate loans. Within corporate loans, the bank expects a relatively higher growth in FY14 than in FY13, partly from management's strategy of focusing on project loan refinancing market.
CASA improves, helped by both savings and current deposits: CASA growth picked up in 4Q with savings deposits growing 7.7% q-o-q (19.2% y-o-y) and current deposits growing 11.3% q-o-q (15.2% y-o-y). This led to a 205 bps sequential improvement in CASA ratio to 47.4%. The bank added 193 branches of the total 518 added in FY13 in deeper geographies. These are micro-branches with two to three employees per branch. Over the medium term, the operating leverage should kick in from these branches. The bank is now present across 1,845 cities in India, with 53% of its 3,062 branches in semi-urban & rural areas.
Asset quality remains rock steady: GNPLs declined 4% q-o-q with a GNPL ratio of 0.97% (1% in 3Q). Provision cover is at 79.9% and in addition to that the bank has a floating provision book of Rs18.4 billion (of which roughly Rs500 million of floating provision is added in the current quarter). CAR stands at a healthy 16.8% (Tier-1 at 11.1%).
At Nomura’s TP, HDFC Bank trades at 3.9x FY14F ABV of Rs175.5 and 20.1x FY14F EPS of Rs34.3 for an ROA of 1.8% and ROE of 21% for FY14F.